A capital gain is the increase in the value of a capital asset, such as a stock, bond or home. If the asset is held for at least one year, then the value is taxed at a lower capital gains tax rate(see Capital Gains Tax section; homes are treated separately in this tax regime). For instance, if you buy a stock at $10 and sell it for $12, you have a capital gain of $2. Capital gains can be both real and nominal. Suppose you buy a stock for $10 and sell it a year later for $12, but inflation was 20% over that period. While you have a $2 nominal capital gain, your real (i.e. inflation-adjusted) capital gain is $0.