capital gain (redirected from Capital Profit)

Capital gain

When a stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss.

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Capital Gain

In real estate and investments, the difference between the purchase price and the sale price when the sale price is more. That is, when an investor buys a security or real estate and sells it for a higher price, he/she incurs a capital gain. Capital gains in the United States are taxed at a lower rate than other income if the asset is held for longer than one year. One may use capital losses to offset capital gains to minimize one's liability for capital gains taxes; indeed, some investors do so deliberately. See also: Paper gain.

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capital gain

The amount by which proceeds from the sale of a capital asset exceed the cost basis.

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Capital gain. When you sell an asset at a higher price than you paid for it, the difference is your capital gain. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share, or $1,000 in total.

If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain.

Most long-term capital gains are taxed at a lower rate than your other income while short-term gains are taxed at your regular rate. There are some exceptions, such as gains on collectibles, which are taxed at 28%. The long-term capital gains tax rates are 15% for anyone whose marginal federal tax rate is 25% or higher, and 5% for anyone whose marginal rate is 10% or 15%.

You are exempt from paying capital gains tax on profits of up to $250,000 on the sale of your primary home if you're single and up to $500,000 if you're married and file a joint return, provided you meet the requirements for this exemption.

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capital gain

The taxable gain recognized from the sale of a capital asset. It is the difference between the sale price of the property and the adjusted basis.Tax laws routinely offer preferential treatment for long-term capital gains on property held for a certain period of time before sale. Capital gains may be offset by capital losses.

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Capital Gain

What Does Capital Gain Mean?

(1) An increase in the value of a capital asset (investment or real estate) above its purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be reported for tax purposes. A capital loss is incurred when there is a decrease in the capital asset value below the purchase price of an asset. (2) The profit that results when the price of a security held in a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized. A capital loss occurs when the opposite takes place.

Investopedia explains Capital Gain

(1) Long-term capital gains usually are taxed at a lower rate than is regular income or dividends. This is done to encourage entrepreneurship and investment in the economy. (2) Tax-conscious mutual fund investors should check a mutual fund's unrealized accumulated capital gains, which are expressed as a percentage of its net assets, before investing in a fund that may have a significant unrealized capital gain component. This circumstance is referred to as a fund's capital gains exposure. When a fund distributes capital gains, the mutual fund's owners are liable for the tax.

Related Terms:
• Bull Market
• Capital
• Capital Market Line—CML
• Return on Assets
• Stock

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Capital Gain

The gain from the sale or exchange of a capital asset.