A realized capital gain occurs when an investor sells an asset for more than the amount originally paid for it. The asset could be a stock, bond, mutual fund, cryptocurrency, property, or another investment. Unlike an unrealized gain, which exists only while an asset is still being held, a realized gain is confirmed through a completed sale.

For example, suppose an investor purchases 100 shares of a company at $20 per share, spending $2,000. If the shares later rise to $30 and the investor sells them, the total sale proceeds are $3,000. Before considering applicable transaction costs and taxes, the investor has realized a capital gain of $1,000.

Realized capital gains are important because they represent an actual financial result from an investment transaction. Depending on the jurisdiction and the type of asset, realized gains may be subject to capital gains tax. Tax treatment can depend on factors such as the investor's income, holding period, asset type, and local regulations.

Investors should also distinguish between realized gains and unrealized gains. If the shares in the example rise to $30 but remain unsold, the $1,000 increase is generally an unrealized gain. Once the shares are sold, the gain becomes realized.

Keeping accurate records is essential for calculating realized gains correctly. Investors may need to consider the original purchase price, commissions, fees, adjustments to cost basis, and selling expenses. Understanding realized capital gains can therefore help investors evaluate portfolio performance, make informed selling decisions, and plan for potential tax obligations.