Capital Gain

A capital gain (or loss) is the difference between the cost price and the selling price of a good or service.

The Formula

Capital gain $= sale\hspace{0.1cm}price-cost\hspace{0.1cm}price$

Example 1

Rachel purchased a house two years ago for $390,000. She decides to sell her property and she gets $420,000 at the auction. At the time of her purchase, Rachel had solicitor’s fees, moving costs and duty which totalled $6,200. Her agent and solicitor have charged Rachel a combined cost of $6,800 to sell the property.

a) Calculate the capital gain (ignore the additional costs) and express this gain as a percentage of the purchase price correct to two decimal places.

Capital gain $= sale\hspace{0.1cm}price-cost\hspace{0.1cm}price$
Capital gain $=420,000-390,000$
Capital gain $=30,000$

Percentage gain $=\dfrac {capital\hspace{0.1cm}gain}{cost\hspace{0.1cm}price}\times 100$
Percentage gain $=\dfrac {30,000}{390,000}\times 100$
Percentage gain $=7.6923$

The capital gain is $30,000 and the percentage gain is 7.69%.

Feedback

Want to suggest an edit? Have some questions? General comments? Let us know how we can make this resource more useful to you.

More Resources

VCAA Pages

Useful Sites

Revision Resources

While we endeavour to provide you with great study material - we’re not qualified teachers, as such Engage cannot guarantee the validity of the information here.

The Victorian Curriculum and Assessment Authority (VCAA) does not endorse this website and makes no warranties regarding the correctness or accuracy of its content. VCE is a registered trademark of the VCAA. Current and past VCE exams and related content can be accessed directly at www.vcaa.vic.edu.au

Contents