What Is Capital Gain?

Capital gain is the profit earned by selling an asset such as a stock at a higher price than it was purchased for.

How it differs from income gain

As opposed to dividends and distributions earned while continuing to hold an asset (income gain), capital gain is a profit that is realized at the moment an asset is sold. Conversely, a loss realized by selling at a lower price than the purchase price is called a "capital loss."

What to keep in mind

Because capital gain involves price-fluctuation risk, it is not guaranteed. Gains on sale are, in principle, subject to tax, and in some cases can be offset against losses from selling other stocks. It is also worth keeping in mind that past price movements do not guarantee future gains.

This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.

Frequently Asked Questions

Is capital gain taxed?
Yes. Gains from selling stocks and similar assets are, in principle, taxed at approximately 20% (combining income tax, resident tax, and related levies) under separate self-assessment taxation. If you use a designated brokerage account with automatic withholding, the securities firm handles the withholding for you.
Am I guaranteed to earn a capital gain?
No. If you sell after the price has fallen below your purchase price, the result is a capital loss instead. Capital gains are not guaranteed and involve the risk of price fluctuations.