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, and mutual funds
• Real estate or property that isn't rented out or used for business
• Your dwelling, furniture, appliances, clothing, and personal car
• 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, and literature you created (or were 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