What is capital income?
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What is capital income?

A:

Quick Answer

Capital income is income generated by an asset over time, rather than from work done using the asset, according to Investopedia. If a farmer buys land for a certain amount of money and sells it at a profit after one year, the difference in the prices is capital income.

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Full Answer

Capital income, also known as capital gains, can only be realized after an asset is sold, according to Investopedia. In contrast, if an asset is sold at a lower price than it was bought for, the result is a capital loss. In the United States, tax exemptions exist on assets such as common stock holdings to encourage investment, according to the IRS.

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