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How To Ensure Sizeable Capital Gain

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The main concern for investors is which assets can provide capital gain. The best news is almost all long term assets provide a good capital gain. Following are the assets that will ensure sizeable capital gain in the coming years.

Tangible Assets: Tangible assets such as property, plant, land and others once sold after a long period usually ensures a nice lump sum of money. However the same cannot be said about machinery, equipment, furniture and fixtures as they undergo wear and tear. Such assets cannot be sold at a profit. They have to be capitalized through depreciation. Capital gain is also achieved through gold and other collectibles also.

Intangible Assets: Intangible assets such as mutual funds, bonds, stocks and long term investments provide excellent capital gains over a long period of time. The royalties earned from patents and copyrights help earn dividends over a period of time.

Capital gains cannot be easily claimed as they have to fulfill certain criteria. The business has to be owned by self. The IRS believes that every asset owned by individuals as capital assets and thus they are subjected to capital gain taxes.

When we talk about capital gain, we should also talk about tax. The moment you sell an asset, it is subjected to tax. Taxpayers report capital gains on IRS Schedule D, but these gains are subject to different tax rates depending on whether they are short term or long term (and in some cases depending on the type of asset).

The system encourages long term investing. Some retirement vehicles, such as 401(k)s and IRAs, allow investors to buy and sell assets within these vehicles without becoming subject to capital gains tax. This tax deferral effectively gives investors a larger balance on which to compound interest or returns, with capital gains tax applying only when the investor begins to make withdrawals.

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