Capital Gain

An increase in the value of a capital asset (investment or real estate), higher than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes. Long-term capital gains are usually taxed at a lower rate than regular income. This is done to encourage entrepreneurship and investment in the economy. Current tax regulations require any gains to be taxed at a rate up to 28%.

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