Whenever a home, a business, or any other asset increases in value over time, that increase is called a "capital gain." While it is another form of income, it differs from wages and salaries in not being paid right after it is earned, but usually only after an interval of some years. A thirty-year bond, for example, can be cashed in only after thirty years.
If you never sell your home, then whatever increase in value it has will be called an "unrealized capital gain." The same is true for someone who opens a grocery store that grows more valuable as its location becomes known throughout the neighborhood arid as it develops a set of customers who get into the habit of shopping at that particular store. Perhaps after the owner dies, his widow or children may decide to sell the store -- and only then will the capital gain be realized.
Sometimes a capital gain comes from a purely financial transaction, where you simply pay someone a certain amount of money today in order to get back a somewhat larger amount of money later on. This happens when you put money into a savings account that pays interest, or when a pawnbroker lends money, or when you buy a $10,000 U. S. Treasury bond for somewhat less than $10,000.
However it is done, this is a trade-off of money today for money in the future. The fact that interest is paid implies that money today is worth more than the same amount of money in the future. How much more depends on many things, and varies from time to time, as well as from country to country at the same time.
In the heyday of 19th-century British industrialization, railroad companies could raise the huge sums of money required to build miles of tracks and buy trains, by selling bonds that paid