Income taxes on capital gains

Many taxpayers think of capital gains as something restricted to Wall Street: buying and selling stocks and bonds. In reality, almost everything owned for investment purposes or personal use may be considered a capital asset for income-tax purposes. Common examples of capital assets include stocks and bonds, as well as your residence, vacation home, rental real estate and collectibles.

When you sell a capital asset, you must calculate the difference between the sales price and your basis in the asset. If the sales price is more than your basis, you have a capital gain; if the sales price is less than your basis, you have a capital loss.