Business Glossary

increase in the value of an asset. The asset may be real estate or a security. For example, an individual sold 100 shares of XYZ company's stock for $105 per share that he bought 10 years ago for $25 per share. The amount of appreciation was $8000 = ($105 - $25) x 100 shares.

increase in the value of an asset such as a stock, bond, commodity, or real estate.

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1. increase in the value of an asset through a rise in market price, appraised value, or income earned, as compared to an earlier period. The opposite is depreciation .
2. increase in the value of one currency vis-à-vis another, without any change in official value occurring. It results from growth in market demand under floating exchange rates rather than official action such as a currency revaluation.

In general: increase in value over time.
Taxes: excess of the fair market value of property over the taxpayer's cost or basis in such property.

an increase in the value of property. Causes of appreciation for real estate may include inflation, demand pressures for land and buildings, a physical addition, modernization, removal of a negative factor from within or outside a property, and sweat equity .

Example: Abel sold for $100,000 land that he purchased 10 years ago for $60,000. During that time the amount of appreciation was $40,000.
Appreciation gains from investment property are generally subject to favorable capital gains tax rates.