Unrealized holding gain definition

An unrealized holding gain is an increase in the value of an asset that a business or individual continues to hold. This gain has not yet been reported as a realized gain on the entity's income statement. Once the asset has been sold, the gain is considered to be realized.

Assets are frequently held even after a gain in their value has occurred, for the following reasons:

  • You expect to generate a further gain

  • You do not want to pay taxes on the gain

  • There is a non-monetary reason for holding the asset; perhaps it has been in the family for an extended period of time, and there is family resistance to selling it.

Example of an Unrealized Holding Gain

An investor owns property that originally cost $500,000. The market value of the property has since increased to $800,000, resulting in a $300,000 unrealized holding gain.

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