Finance Terms
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What is Capital Gain?
In finance a Capital Gain is profit that is realized from the sale of an asset that was previously purchased at a lower price. The most common capital gains are realized from the sale of stocks bonds and property. (If the sale of the asset had yielded a loss rather than a profit this loss would be called a capital loss.)
Capital Gains are often exempt from income tax in which case it may be important to distinguish capital gains (or losses) realized on the sale of fixed assets (long-life assets that form part of the structure of a business such as real property) from trading profits or losses realized on the sale of trading stock (short-life assets that are quickly sold on).
In many jurisdictions including the United States and the United Kingdom capital gains are subject to a Capital Gains Tax.