There may be appreciation in value of financial assets over a period of time, and this appreciation is called Capital Gain. In other words, a capital gain is a sort of profit resulting from the appreciation of value of a financial asset over its purchase price. Such gains may also occur in other types of assets too, say the real estates. This is also called capital gain. A Capital Gain will normally attract tax called Capital Gain Tax. However, under certain circumstances, government may exempt the levy an d collection of any tax on the Capital Gains.
Interestingly, capital gain is notional until it is realized by selling that particular asset. Sometimes, capital gains may erode rather fast. For example, appreciation in equity stocks may continue to register capital gains and suddenly when the market turns southward (that is, the price falls), you may find the capital gains eroded and a position may come which may reduce the price below the purchase price. Such a situation will result into a capital loss.
- design on March 18, 2017 @ 08:07:29
This post was created by Björn Becker on March 18, 2017.