Capital Gain
Profit realized when an asset’s selling price exceeds its purchase price.
Detailed Description
Capital Gain
What are the two main types of capital gains?
The two main types of capital gains are realized gains, which occur when an asset is sold, and unrealized gains, which represent the increase in value that has not yet been sold.
How are short-term capital gains taxed?
Short-term capital gains are typically taxed at the individual's ordinary income tax rate, which can range from 10% to 37%.
What is the formula for calculating capital gains?
The formula for calculating capital gains is Capital Gain = Selling Price - Cost Basis.
What is the capital gains exclusion for homeowners?
Homeowners may qualify for a capital gains exclusion of up to $250,000 ($500,000 for married couples) on the sale of their primary residence, provided they meet specific criteria.
How can investors offset capital gains?
Investors can offset capital gains with capital losses through a strategy known as tax-loss harvesting, which helps reduce overall taxable income.