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What is a ‘capital gain’?

It’s pretty much what it sounds like: an increase in the value of your investment.

If you sell an investment that has gained in value, that’s a capital gain. You’ve made a profit and are subject to federal capital gains taxes within your taxable brokerage account.

However, investments can also lose value. This which is known as a capital loss and is claimable when the loss is realized (AKA when the investment is sold).

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