Capital Gains Tax - Explained

Understanding Capital Gains Tax

Definition of Capital Gains Tax

A capital gains tax is a tax levied on the profit resulting from the sale of an asset. It is calculated as the difference between the acquisition cost and the selling price of the asset.

Capital gains taxes are typically lower than ordinary income taxes, as they are intended to encourage investment and economic growth. However, the specific rates and rules can vary significantly depending on the jurisdiction and the type of asset sold.