capital gain: meaning, definition, pronunciation and examples
C1Formal, Technical, Financial
Quick answer
What does “capital gain” mean?
The profit earned from the sale of a capital asset, such as property, stocks, or bonds, when the selling price exceeds the original purchase price.
Audio
Pronunciation
Definition
Meaning and Definition
The profit earned from the sale of a capital asset, such as property, stocks, or bonds, when the selling price exceeds the original purchase price.
In a broader economic context, it refers to the increase in the value of an investment or asset over time, which is realized upon its sale. The concept is central to investment strategy, taxation, and personal finance.
Dialectal Variation
British vs American Usage
Differences
No significant lexical differences. The concept and term are identical. Minor differences may exist in related tax law terminology (e.g., 'Annual Exempt Amount' in UK vs. 'Standard Deduction' for capital gains in US contexts).
Connotations
Neutral financial/legal term in both varieties. Associated with investment, wealth, and taxation.
Frequency
Equally frequent in both UK and US financial, business, and news media.
Grammar
How to Use “capital gain” in a Sentence
[Subject/Investor] realized a capital gain on [Asset].The sale of [Asset] resulted in a capital gain.[Asset] generated a substantial capital gain.Vocabulary
Collocations
Examples
Examples of “capital gain” in a Sentence
verb
British English
- The shares have significantly appreciated in value.
- He realised the gain on the property last year.
American English
- The stock appreciated, leading to a gain.
- She decided to realize the gain on her investment.
adverb
British English
- The asset was sold profitably.
- The investment performed exceptionally well.
American English
- The property sold at a profit.
- The trade was executed successfully.
adjective
British English
- The capital gains allowance was increased in the budget.
- They discussed the capital gains tax implications.
American English
- The capital gains rate is a topic of debate.
- He filed a schedule for his capital gains income.
Usage
Meaning in Context
Business
Central to financial reporting, investment analysis, and corporate strategy discussions about asset divestment.
Academic
Used in economics, finance, and law papers discussing investment returns, taxation policy, and wealth inequality.
Everyday
Used by individuals discussing personal investments, property sales, or tax returns.
Technical
Precisely defined in tax codes and accounting standards (e.g., IRS regulations, IFRS) with rules for calculation, holding periods, and tax treatment.
Vocabulary
Synonyms of “capital gain”
Strong
Neutral
Weak
Vocabulary
Antonyms of “capital gain”
Watch out
Common Mistakes When Using “capital gain”
- Using it as a verb (e.g., 'I capital gained on my house' – incorrect). Correct: 'I made a capital gain on my house.').
- Confusing 'capital gain' (the profit itself) with 'capital gains tax' (the tax on that profit).
FAQ
Frequently Asked Questions
For tax purposes, they are often treated differently. 'Income' typically refers to earnings from work or interest, while 'capital gains' are profits from asset sales, often taxed at different rates.
A realized gain occurs when you actually sell the asset and lock in the profit. An unrealized (or paper) gain is the increase in value of an asset you still own; it could be lost if the value later falls.
Tax is usually due in the tax year in which you realize the gain (i.e., sell the asset). Rules vary by country regarding payment deadlines.
No, by definition a 'gain' is positive. A negative outcome from selling an asset is called a 'capital loss'.
The profit earned from the sale of a capital asset, such as property, stocks, or bonds, when the selling price exceeds the original purchase price.
Capital gain is usually formal, technical, financial in register.
Capital gain: in British English it is pronounced /ˌkæp.ɪ.təl ˈɡeɪn/, and in American English it is pronounced /ˌkæp.ə.t̬əl ˈɡeɪn/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “To crystalize a gain (formal for realizing a capital gain).”
Learning
Memory Aids
Mnemonic
Think: CAPITAL (your money or assets) GAINS (increases/profits). It's the GAIN on your CAPITAL.
Conceptual Metaphor
WEALTH IS A FLUID (it can 'flow', be 'realized', 'distributed'). GROWTH IS UP (the asset's value 'goes up', leading to a gain).
Practice
Quiz
What is a 'capital gain'?