Capital gains are the profits obtained from the sale of a capital asset. However, in the event of a loss, it is referred to as a capital loss. This can occur when an asset is sold for less than its original purchase price. It is important to note that capital losses can be used to offset capital gains for tax purposes. This means that if you have a capital gain in one year and a capital loss in another, you can reduce your overall tax liability by offsetting the two.