Generally, all belongings or 'property' you own is considered a capital asset. This is true if the asset is used for personal use or investment purposes.
When you sell the asset, the difference in the selling price and purchase price is considered either a capital gain or a capital loss. Capital losses on personal property, such as vehicles and homes, are not deductible.
Capital Gains and Losses are classified as either Long Term or Short Term. Long Term refers to assets held for more than one year. Short Term refers to assets held for one year or less. The day after you acquired the asset would be the first day you owned the asset.
Capital gains and deductible capital losses are reported on Form 1040, Schedule D (PDF). If you have a net capital gain, that gain may be taxed at a different tax rate than your ordinary income tax rates.
If you received the asset as a gift or inheritance, refer to Publication 551 for information about your basis.
If you have a taxable capital gain, you may be required to make estimated tax payments. Refer to Publication 505, Tax Withholding and Estimated Tax, for additional information.
If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed is limited to $3,000, or $1,500 if you are married filing separately. If your net capital loss is more than this limit, you can carry the loss forward to later years. Use the Capital Loss Carryover Worksheet to figure the amount carried forward.
Additional information on capital gains and losses is available in Publication 550, Investment Income and Expenses, and Publication 544, Sales and Other Dispositions of Assets. If you sell your main home, refer to Publication 523, Selling Your Home.