Capital Gain

Definition: A capital gain generally arises when a capital asset is sold or exchanged for an amount realized greater than its adjusted basis.

Example

An investment parcel has $150,000 adjusted basis and a $190,000 amount realized after selling costs; the simplified gain is $40,000.

Keep the distinction clear

Gain is not the same as cash left after paying off a mortgage. Exclusions, holding period, depreciation, and the asset's tax classification can change the taxable result; there is no single universal capital-gains rate.

Related terms

Adjusted Basis · Capital Asset · Appreciation

Keep studying

Real Estate Capital Gains: Basis, Profit, and Home-Sale Exclusions

References: IRS Topic 409: capital gains and losses · IRS Publication 544: sales and dispositions of assets

Pronunciation (US): KAP-ih-tuhl gayn (capitals show stress)

Pronunciation reference: Merriam-Webster