Selling an asset for more than you paid creates a taxable capital gain. Enter purchase and sale values and a regime to estimate the tax and your net proceeds.
Regimes differ widely: some countries tax a flat rate (Italy 26%), others use income brackets or holding-period discounts. Long-term US gains are taxed more gently than short-term ones.
Losses, allowances and asset-specific rules (like primary-residence exemptions) can change the outcome substantially — confirm with local rules before acting.
Cost basis is the input that decides the bill, and it is more than the purchase price. Brokerage fees, stamp duties and reinvested dividends already taxed as income normally add to it; corporate actions such as splits and spin-offs adjust it. A basis recorded carelessly at the time of purchase is expensive to reconstruct a decade later.
Which shares you are deemed to have sold matters when a holding was built up over several purchases. Some regimes require first-in-first-out, others allow specific identification or impose an average cost, and the difference can be substantial for a position accumulated across a rising market.
The tax is generally triggered by realisation, not by the gain itself — an unrealised profit is untaxed however large it grows. That is what makes timing a decision rather than an accident: deferring a sale across a tax year, or into a year with lower income, is often worth more than any allowance.
Frequently asked questions
How is capital gains tax calculated?
On the gain, not the sale price: proceeds minus your cost basis (purchase price plus costs). The rate depends on the country, your income and sometimes the holding period.
Does how long I hold an asset matter?
In the US, assets held over a year get lower long-term rates. Several countries apply holding-period discounts or exemptions; others, like Italy's flat 26%, do not care how long you held.
Can losses reduce my capital gains tax?
Generally yes — realized losses offset realized gains, and many regimes let unused losses carry forward. The exact netting rules are country-specific.