What is a capital asset?
Just about everything you own and use for personal or investment purposes is a capital asset, for example:
- Personal investment property, stocks, bonds, mutual funds, etc.
- Real estate or property that isn't rented out or used for business
- Your dwelling, furniture, appliances, clothing, personal car, etc.
- Collectibles, such as a coin or baseball card collection
Common items that aren't used for personal or investment purposes (and are therefore not considered capital assets) include:
- Equipment, vehicles, and real estate used for or by your business
- Business inventory and accounts receivable
- Artwork, musical compositions, or literature you created (or was gifted/inherited from the artist)
- The part of your house that you use and depreciate as your home office, if it qualifies for a home office deduction
- Rental property