Long-term capital gains refer to the profit earned from the sale of an asset that has been held for more than one year. This can include investments such as stocks, bonds, and real estate. The gain is calculated by subtracting the original purchase price from the selling price of the asset. In many countries, including the United States, long-term capital gains are taxed at a lower rate than short-term gains, which apply to assets held for one year or less. This tax incentive encourages investors to hold onto their investments longer, potentially leading to more stable financial markets.