What is the definition capital gain

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Capital gains are profits from the sale of an asset such as a stock, bond, mutual fund, real estate, or other investment. Capital gains are realized when the asset is sold for more than the original purchase price. The amount of the gain is the difference between the sale price and the purchase price. Capital gains are taxed at a lower rate than ordinary income, making them an attractive investment option for many.

Capital gains are usually taxed at a lower rate than ordinary income. This is because capital gains are considered to be long-term investments, meaning that they have been held for more than one year. Long-term investments generally have a lower tax rate than short-term investments. The lower tax rate makes capital gains attractive to investors because it allows them to keep more of their profits.

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Capital gains can be realized in two ways. The first is through an outright sale of the asset. When an investor sells an asset for more than the original purchase price, the difference between the sale price and the purchase price is the capital gain. The second way to realize a capital gain is through an appreciation in the value of the asset. In this case, the investor does not need to sell the asset in order to realize the gain. Instead, the gain is realized when the asset’s value increases.

Capital gains can be either short-term or long-term. Short-term capital gains are realized when an asset is held for one year or less. Long-term capital gains are realized when an asset is held for more than one year. The tax rate on long-term capital gains is generally lower than the tax rate on short-term capital gains.

Capital gains can be a great way to make money, but they also come with risks. Investors should always do their research and understand the risks associated with any investment before investing. Additionally, investors should be aware of the tax implications of their investments, as capital gains are taxed differently than ordinary income.

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