Get to know Capital Gain

Come on, start to know Capital Gain Before deciding to invest in property. Investors must know in order to get a profit.

In the world of investment, there are two main types of benefits that are often discussed, namely routine income such as dividends or rent, and the difference between asset buying and selling prices. The latter is called Capital Gain.

Although sounding technical, Capital Gain Actually it is very close to daily life, especially for those of you who are starting to invest in property, stocks, or even mutual funds.

Unfortunately, many people only focus on the value of the asset when purchased, without taking into account the potential increase in value in the future. In fact, it is precisely where the price increase emerged.

This article will discuss understanding Capital GainThe types, how to calculate, to the difference with dividends so that you can make wise and measurable investment decisions.

Blog Skillife presents information from various credible and trusted sources such as the news portal on line and banking sites.

What is Capital Gain?

Capital Gain is the advantage you get when selling assets higher than the price of buying. This asset can be in the form of houses, land, stocks, or other investment instruments.

In the context of property, this capital advantage arises when property prices rise after you buy and you sell it at a higher price.

Conversely, if the selling price is even lower than the purchase price, then this condition is called capital loss.

So, Capital Gain And capital lost are two sides of the same coin. Both of them must be understood because investment always involves the possibility of profit and loss.

Types of Capital Gain

Based on the period of ownership, capital profits are divided into two:

1. Short term

It happens when you sell assets in less than one year after being purchased. Usually done by active investors and quickly read market trends.

The potential is indeed high, but the risk is also large because the price can be fluctuating in a short time.

2. Long term

This is a more stable type. You buy assets, whether it’s a house, land, or stock, and store it in a period of more than one year before selling.

Property investors who are looking for grades gradually tend to choose this strategy. Of course, investors must be patient.

In the world of property, long -term investors usually buy tread houses or apartments in locations that will develop in the future.

A few years later, when the area had begun to be crowded, property value rose and capital profits occurred.

How to calculate capital gain

If you want to calculate capital profits are actually simple. You can use the following formula.

Capital gain = selling price – purchase price

Example:
You bought a house for Rp800 million and sell it two years later at a price of Rp1.2 billion. So Capital Gain What you produce is:

IDR 1,200,000,000 – IDR 800,000,000 = IDR 400,000,000

However, do not forget, capital profits can also be subject to tax depending on the type of asset and tax provisions that apply.

For example, in the sale of property, you will be subject to a final income tax (income tax) of 2.5% of the selling price. This means that from the capital profit earlier, there is a tax that must be paid at Rp10 million.

The difference between capital gain and dividend

Although both profitable, Capital Gain and different different dividends:

• Capital Gain Derived from the difference in selling and buying assets. The advantage only appears when you release the asset.
• Dividend is part of the company’s profits distributed to shareholders. You don’t need to sell assets to get it.

In other words, capital Gain is active because you have to make a transaction. While dividends are passive, just wait, and the results will come regularly.

This difference is important to determine the investment strategy that is in accordance with your financial goals.

Capital gain in property investment

In the property sector, Capital Gain is one of the main reasons for someone to buy tread houses, apartments, or land plots.

Many investors hope that property prices will rise over time, especially if it is located in a developing area, aka Solar property.

For example, you buy a house in a large suburbs at an affordable price. After the infrastructure developed and the road access improved, the house value jumped.

That’s when, you can feel the benefits Capital Gain in real. However, it should be noted that this is not a guarantee.

There are times when the price of property is stagnant or even down, especially if it happens Excess supply or the area is less growing.

That is why location analysis, market trends, and long -term projections are very important before buying property so you can predict the price increase.

Capital advantages can be a big source source, as long as you know how to calculate, the best time to sell, and the strategy of storing assets in the long run.

As part of mature financial planning, consider the increase in property prices as one of the components in your portfoliom.

Because when you know the value of the asset can grow, today’s decision can be a big advantage in the future.

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