Capital Gain or Loss

Definition: Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property.

Example: 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. For example, if you own your home for more than one year, if you had bought your home for $200,000 and sell the home for $$225,000, then you have a capital gain of $25,000. There is a move by many in government to increase capital gains taxes as they see this lower rate as unfair???