When you sell an investment for more than you bought it, you may owe taxes on the profit, known as capital gains tax. The tax rate depends on how long you held the investment. If it was longer than a year, it's usually lower (long-term capital gains) than if you held it for less than a year (short-term capital gains). For instance, if you bought stocks for $1,000 and sold them for $1,500, your profit is $500. If you fall into a 15% long-term capital gains tax bracket, you would owe $75 in taxes on that profit ($500 * 0.15).

Capital gains tax is a tax on the profit made from selling an asset, such as stocks or property. The rate of tax can vary depending on the duration the asset was held. Assets held for more than a year qualify for lower tax rates compared to those sold within a year.