Capital Gain is when an investor profits off of the sale of an investment when the sale price is greater than its purchase price. Capital loss is when the investment's purchase price is greater than the profits made from the sale of the investment. Capital gains are a part of the net value received during the sale of an asset subtracted by the basis of the asset at the sale. The net value at the time of sale is determined by the money received subtracting all other costs from the sale. The basis of a property is decided at the time of sale, these are things like the purchase price and any costs paid by the buyer to obtain ownership of the property. After its purchase, the basis may change over time because of depreciation or any appropriate change in the market or property. Capital Gains can be considered different than other incomes to calculate tax liabilities so depending on the tax law, capital gains may create less of a tax liability for the seller than normal income does.