Picture this. You own a fine piece of jewelry, a ring. Perhaps this ring has been in your family for a while. Your insurance company valued the ring at $4,000.
When discussing investments and capital gains, the focus is typically on traditional investments (bonds, cash, and stocks) or alternative investments (real estate, hedge funds, commodities, or private equities).
As an investor, one of the things that drives your yes/no decisions about whether to acquire and hold a particular asset is the return on that investment, based on what it costs to buy it. In other words, yield. Also known as rate of return, yield is stated as a percentage of the amount you invested in that asset.
As an employee, you might receive various forms of compensation. These likely include wages or salaries, various forms of insurance, bonuses, paid time off, and pension plans.
It seems as though just about everything in the United States is subject to some sort of tax. As an American citizen, you’re taxed on wages and earnings, the purchase of goods and services, and property ownership.
When selling your primary residence, taxes still matter — and they can get complicated. Your home is a capital asset and, therefore, subject to capital gains tax. If your home appreciated in value, you might be required to pay taxes on that profit. However, there are exceptions.