What does the term "capital gains" refer to in real estate?

The term "capital gains" in the context of real estate specifically refers to the profits realized from the sale of a property. When a property is sold for more than its purchase price, the difference represents capital gains. This concept is significant in real estate transactions as it affects an investor's overall profitability and tax liabilities. Investors should be aware of how capital gains are calculated, as they may be subject to capital gains taxes depending on how long the property was owned and other factors.

The other options, while related to real estate, do not accurately define capital gains. Expenses related to property maintenance pertain to the ongoing costs of keeping a property operational, while value appreciated over time describes the increase in property worth but does not directly address the profit realized from a sale. Tax deductions on mortgage interest relate to the tax benefits of homeownership but are not connected to the profits made from selling a property. Understanding capital gains is essential for investors and homeowners alike in managing their financial strategies within the real estate market.