Capital Gain
Capital gain refers to the increase in value of an asset (such as stocks or real estate) when it is sold for more than its purchase price. Capital gains are a way for investors to realize profits and are typically subject to capital gains tax.
Definition: Capital gains refer to the increase in value of an asset (such as stocks, real estate, etc.) when it is sold for a price higher than its purchase price. Capital gains are a way for investors to realize profits and are usually subject to capital gains tax.
Origin: The concept of capital gains dates back to early market economies when people profited from buying and selling land, property, and other assets. With the development of financial markets, the forms of capital gains have diversified to include financial instruments such as stocks, bonds, and funds.
Categories and Characteristics: Capital gains can be divided into short-term capital gains and long-term capital gains. Short-term capital gains refer to the increase in value of assets held for less than a year and are usually taxed at a higher rate; long-term capital gains refer to the increase in value of assets held for more than a year and are taxed at a lower rate. Short-term capital gains are more volatile and suitable for investors with a higher risk tolerance, while long-term capital gains are more stable and suitable for long-term investors.
Case Studies: Case 1: Xiao Ming bought 100 shares of a company at 50 yuan per share in 2022, with a total cost of 5000 yuan. In 2024, Xiao Ming sold these shares at 70 yuan per share, with a total revenue of 7000 yuan. Xiao Ming's capital gain is 7000 yuan minus 5000 yuan, which is 2000 yuan. Case 2: Xiao Hong bought a property for 1 million yuan in 2019 and sold it for 1.5 million yuan in 2024. Xiao Hong's capital gain is 1.5 million yuan minus 1 million yuan, which is 500,000 yuan.
Common Questions: 1. Are capital gains taxable? Yes, capital gains are usually subject to capital gains tax. 2. How to calculate capital gains? Capital gains are calculated as the selling price minus the purchase price. 3. What is the difference between short-term and long-term capital gains? Short-term capital gains refer to the increase in value of assets held for less than a year and are taxed at a higher rate; long-term capital gains refer to the increase in value of assets held for more than a year and are taxed at a lower rate.
