What is capital gain in real estate?
Capital gain in real estate refers to the profit earned when a property is sold at a higher price than its original purchase cost. It represents the increase in the property’s value over time and is a key source of returns for real estate investors. Capital gains can be short-term or long-term, depending on how long the property is held before sale.
How Capital Gain Works
Capital gain is calculated as the difference between the selling price and the purchase price of a property.
Basic Concept
- Selling Price: Amount received from selling the property
- Purchase Price: Original cost of acquiring the property
Capital Gain = Selling Price – Purchase Price (after adjustments like costs and taxes)
Capital gain is a major driver of wealth creation in real estate, achieved through the increase in property value over time. With the right investment strategy and timing, it can significantly enhance overall returns from property investments.
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