This is the sale price minus any commissions or fees paid. Basis may also be increased by reinvested dividends on stocks and other factors. ![]() This is generally the purchase price plus any commissions or fees paid. Let’s take it step-by-step and find out the answer to “How does capital gains tax work?” Capital gain calculation in four steps The basics of a capital gain calculation is to find the difference between what you paid for your asset or property and what you sold it for. ![]() The taxation is classified by the length in which you own the asset, which we’ll describe in detail below! How to calculate capital gains tax - step-by-step ![]() If you sell your asset for more than you bought it, you’ll have a capital gain – If the opposite is true and you sell the asset for less than you bought it, you’ll have a capital loss.Ĭapital gains tax is the taxation of capital assets. The definition is pretty simple: It’s the difference between what you paid for a capital asset (like bonds, mutual funds, real property, or stocks) and what you sold it for.
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