Capital Gains Tax

Capital Gains Tax (CGT) is a tax levied on the profit realized from the sale of an asset. This profit, known as capital gain, is calculated as the difference between the selling price of the asset and its original purchase price (or basis). Capital gains can arise from various assets, including stocks, real estate, and other investments. The tax rate applied to capital gains can vary based on several factors, including the duration for which the asset was held (short-term vs. long-term) and individual or corporate tax status. Short-term capital gains, typically from assets held for less than a year, are usually taxed at the individual’s ordinary income tax rate, while long-term capital gains are often taxed at a lower rate to encourage long-term investment. The implementation and rates of capital gains tax can differ significantly between countries, impacting investment behavior and economic activity.