Written by Capital gains are the profits made from the sale of an investment or asset, such as stocks, bonds, or real estate, that has increased in value. The gain is realized when the asset is sold for a higher price than its purchase price.
Capital gains are typically categorized into two types:
– **Short-Term Capital Gains**: These are gains on investments held for one year or less. They are typically taxed at a higher rate than long-term capital gains.
– **Long-Term Capital Gains**: These are gains on investments held for more than one year. They are taxed at a more favorable rate, which can be lower than ordinary income tax rates.
Capital gains are a primary source of profit for investors in the stock market, real estate, and other asset classes. The tax treatment of capital gains varies depending on the length of time the asset is held and the tax laws in your country, so it’s important to understand how taxes will affect your returns.
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