Capital gain

A capital gain refers to profit that results from a sale of a capital asset, such as , bond or real estate, where the sale price exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.

Capital gains may also refer to a different form of profit received from an asset which refers to "investment income" in the form of cash flow or passive income that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets.

Most countries impose a tax on capital gains of individuals or corporations.

Tax relief or exemptions may be available for capital gains in relation to holdings in certain assets such as significant holdings. Reasons for such exemptions are to provide incentives for entrepreneurship, to compensate for the effects of inflation, or to avoid "double taxation".

Capital gains or losses are not counted during national income accounting as they only pertain to transference of rights to shares and assets and hence do not correspond to any new production activity.

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