return of capital

Return of Capital

A return from an investment that is not considered income. The return of capital is when some or all of the money an investor has in an investment is paid back to him or her, thus decreasing the value of the investment. This is not a gain of any type because it is not in excess of the original investment.

Notes:

You are not taxed on this return until it begins to exceed your original investment value.

See also: Capital Gain, Capital Loss, Deferred Income Tax, Exempt Income, Nontaxable Dividend, Return

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Return of capital

A cash distribution resulting from the sale of a capital asset, or securities, or tax breaks from depreciation.

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return of capital

See capital dividend.