Capital Gains Tax

Capital gains tax is charged on the profit from selling an asset. Property, shares and derivatives all fall under it when sold at a gain. Nothing is owed while you hold; the liability arises at the moment of sale.

It applies only to the gain — sale price minus purchase price. Costs incurred buying and selling, such as transfer duties, broker fees and registration, are deductible too, so keeping receipts genuinely lowers the bill.

Rates vary widely by asset type and holding period. Long-holding relief that reduces the rate over time is common, and some categories, such as a primary residence, may be exempt entirely. Rules differ by country, so check yours.

A common technique is realising gains and losses in the same tax year, since selling a losing position reduces the taxable gain. Letting tax dictate an investment decision inverts the priorities, though — decide on the investment first.