Understanding Capital Gains Tax
I built this calculator to help investors and property owners get a quick estimate of the capital gains tax they might owe when selling an asset. Capital gains tax (CGT) is charged on the profit you make when you sell something that has increased in value — think stocks, investment property, or a business. It is not charged on the full sale price, only on the gain.
Short-Term vs Long-Term Gains
How long you hold an asset before selling it has a big impact on your tax bill. In the United States and many other countries, gains are split into two categories:
- Short-term gains — assets held for one year or less. These are typically taxed at your ordinary income tax rate, which can be as high as 37% in the US.
- Long-term gains — assets held for more than one year. These qualify for preferential rates:
0%,15%, or20%in the US depending on your taxable income. - Your gain is calculated as:
Sale Price − Cost Basis − Selling Costs
Outside the US, rules differ significantly. The UK applies annual CGT allowances and different rates for residential property versus other assets. Australia taxes gains at your marginal income rate but offers a 50% discount for assets held longer than 12 months. Use the country selector in the calculator above to apply the correct rules for your situation.
Frequently Asked Questions
What is a cost basis?
Your cost basis is what you originally paid for the asset, including any commissions or fees. If you bought 100 shares at $50 each and paid a $10 brokerage fee, your cost basis is $5,010. Accurately tracking your cost basis is essential for calculating the correct taxable gain.
Do I owe CGT if I reinvest the proceeds?
In most countries, yes — the act of selling a capital asset triggers a tax event regardless of what you do with the money afterwards. There are exceptions, such as 1031 exchanges for real estate in the US, but those involve strict rules. Always verify with a professional before assuming a reinvestment strategy defers your liability.
How accurate is this estimate?
This calculator provides a general estimate based on widely published tax rates. It does not account for state or provincial taxes, alternative minimum tax, investment surtaxes, or individual circumstances like loss carry-forwards. This is an estimate — consult a tax professional for advice specific to your situation.