Meaning & use
capital gain
Last updated
Meaning
nouncountablefinance
The profit made when you sell an asset such as shares or property for more than you paid for it.
Grammar: Often plural in tax contexts: capital gains are taxed at a lower rate.
Patterns
- a capital gain on something
- a capital gain from selling something
She made a large capital gain when she sold her shares.
The couple had to report a capital gain on the sale of the second home.
Capital gains were up this year because the market rose.
Word forms
| plural | capital gains |
|---|
Common combinations
- realize a capital gain
- You only realize a capital gain when you sell the asset.
- capital gains tax
- He paid capital gains tax on the profit from the sale.
- short-term capital gain
- A short-term capital gain is on an asset held for under a year.
- long-term capital gain
- Long-term capital gains are often taxed at a lower rate.
- report a capital gain
- You must report a capital gain on your tax return.
Synonyms and how they differ
- profit
- Profit is the general word for money made, whereas capital gain is specifically profit from selling an asset.
- appreciation
- Appreciation describes an asset rising in value, even if you have not sold it, while a capital gain is the profit actually made on a sale.
- return
- Return is broader and can include income such as dividends, not just the rise in the asset's price.
Opposites
Word family
- capital noun
- money or assets used to make more money
- gain noun
- an increase in money or value
- capital loss noun
- the loss made when an asset is sold for less than its cost
- capitalize verb
- to provide money for a business, or to profit from something
Commonly confused: capital gain or income? capital gain or capitol?
capital gain vs income
Income is money earned regularly, such as wages or dividends, while a capital gain comes from the increase in an asset's value when it is sold.
capital gain vs capitol
A capitol is a government building; capital in capital gain is about money.
Practice
Maria bought shares for $2,000 and sold them for $3,500. What is the $1,500 difference called?
Choose one answer.
A capital gain is the profit from selling an asset for more than its cost. A dividend is a payment a company makes to shareholders, which is a tempting but different thing.
Make it your own
Write a sentence using “capital gain”, then check it and compare it with the examples above.