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Capital Gain "Capital gain" is a financial term that refers to the appreciation or increase in value of a capital asset over and above the purchase price of said asset. Conversely, when such an asset declines in value from the purchase price it is said to have incurred a capital loss. Capital gains can be realized on real assets (such as real estate property) and on financial assets (such as stocks and bonds.) According to the United States Tax Code (see section 1222) the sale or exchange of any capital assets which includes all items in an individual's home as well as property and investment positions can accrue capital gains or losses. When a capital asset is sold for an amount greater than the purchase price, the gain (or the difference in the purchase v. the sale price) is taxable. In general practice, when appreciated capital assets are sold after more than a year of ownership the tax rate applied (long-term capital gain) is a maximum 15 percent. More Glossary Terms Explained here |
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