How is capital gains tax calculated?

Start with the sale price and subtract selling costs to get net proceeds. Then subtract your cost base, which is the purchase price plus acquisition costs plus any capital improvements. The result is your gross gain. Subtract any annual tax-free allowance you still have available, then multiply the remaining taxable gain by the rate that applies to your holding period.

What is the difference between short-term and long-term capital gains?

Most tax systems charge a lower rate on assets held beyond a threshold period. In the United States that threshold is more than twelve months, and long-term gains are taxed at preferential rates while short-term gains are taxed as ordinary income. Other countries use different periods and different asset classes, so set the threshold and both rates to match your own jurisdiction.

Which costs can I deduct from a capital gain?

You can usually deduct acquisition costs such as stamp duty, legal fees, survey fees and broker commission, plus the cost of capital improvements that add lasting value, and the selling costs of the disposal itself. Routine repairs, redecoration, mortgage interest and insurance are normally treated as running expenses and cannot be added to your cost base.

What happens if I sell an asset at a loss?

A disposal below your cost base creates a capital loss and no capital gains tax is due on it. Most tax systems let you set that loss against capital gains made on other assets in the same tax year, and carry any unused balance forward to future years. Losses generally have to be reported in the year they arise to stay available.

Capital Gains Tax Calculator

See the gain on an asset sale, how much of it is taxable after your allowance, and what you keep once the tax is paid.

Know the Tax Before You Sell

Timing changes the bill. Enter your figures and compare the tax on a short-term disposal against the same sale made after the long-term holding threshold.

Purchase and Sale

Purchase Price ($) What you originally paid for the asset

Purchase Costs ($) Stamp duty, legal fees, survey, broker commission

Sale Price ($) Gross disposal proceeds before any deductions

Sale Costs ($) Agent commission, legal fees, marketing

Improvement Costs ($) Capital improvements only, not repairs or upkeep

Holding Period (months) Months between acquisition and disposal

Tax Rules (edit to match your country)

Annual Tax-Free Allowance ($) Exempt amount still unused this tax year, across all disposals

Long-Term Threshold (months) The long-term rate applies at or beyond this many months. The US test is more than 12 months, so enter 13 to model it strictly. Set 0 if your country makes no distinction

Short-Term Rate (%) Often your ordinary income rate. Verify current figures with your tax authority

Long-Term Rate (%) Preferential rate once the threshold is met. Verify current figures

Results

Capital Gains Tax Due

At the applicable rate

Gross Capital Gain

Net proceeds less cost base

Taxable Gain

After the annual allowance

Net Proceeds After Tax

Sale price less sale costs and tax

Effective Tax Rate

Tax as a share of the gross gain

Holding period

Enter your figures to see which rate applies.

Full Working

Purchase price 0

Purchase costs 0

Capital improvements 0

                    Total cost base
                    0
                

Sale price 0

Less sale costs 0

                    Net proceeds
                    0
                

Gross gain 0

Less allowance used 0

Taxable gain 0

Rate applied 0%

                    Capital gains tax
                    0
                

                    Profit you keep after tax
                    0
                

Where the Gain Goes

Allowance 0

Tax 0

Kept 0

Sell Before or After the Long-Term Threshold

Scenario	Holding	Rate	Taxable Gain	Tax Due	Net Proceeds

Tax at Other Rates

Tax Rate	Tax Due	Net Proceeds After Tax	Profit Kept	Effective Rate on Gain

The Calculation

Cost base = Purchase price + Purchase costs + Improvements
Gross gain = (Sale price − Sale costs) − Cost base
Taxable gain = max(0, Gross gain − Annual allowance)
Tax = Taxable gain × Rate (short-term or long-term)

Assumptions this calculator makes

It models a single disposal of a single asset at one flat rate. It does not model income-linked rate bands, additional surtaxes such as the US net investment income tax, indexation or inflation relief, depreciation recapture on rental property, main-residence or primary-home exemptions, instalment sales, or gains rolled into a replacement asset. Rates, thresholds and allowances are entered by you and are not kept up to date automatically, so confirm the current figures with your tax authority or a qualified adviser before acting.

Understanding Capital Gains Tax

What Makes Up Your Cost Base

Tax is charged on the gain, not the sale price, so every pound or dollar you can legitimately add to the cost base reduces the bill. The cost base is normally the purchase price plus acquisition costs plus capital improvements.

Counts: stamp duty, transfer tax, legal and survey fees, broker commission
Counts: extensions, new roofs, rewiring and other lasting improvements
Does not count: repainting, repairs, insurance, mortgage interest
Keep the paperwork: undocumented improvements are routinely disallowed

Why the Holding Period Matters

Most systems reward patience with a lower rate once an asset has been held past a threshold. The gap is often the single largest lever a seller controls.

United States: more than 12 months for the long-term rate; short-term gains are taxed as ordinary income
India: 12 months for listed equity, 24 months for property
Australia: a 50% discount on the gain after 12 months for individuals
UK and many others: no holding-period distinction at all, so set the threshold to 0

Allowances and Losses

The annual allowance is a yearly exemption shared across all your disposals, not a per-asset figure. If you have already used part of it elsewhere, enter only the balance that remains.

Losses on other assets can usually be offset against gains in the same year
Unused losses are commonly carried forward indefinitely once reported
Spreading disposals across two tax years can use two annual allowances
Transfers between spouses are often tax-neutral and can double the allowance

Reading the Effective Rate

The effective rate is the tax divided by the gross gain, so it is always lower than the headline rate whenever an allowance applies. It is the number to compare across scenarios, because the headline rate alone hides the effect of the exemption and of deductible costs.

A large gap between the effective rate and the headline rate means the allowance is doing a lot of work, which is a signal that splitting the sale across tax years may be worth modelling.

Know the Tax Before You Sell

Purchase and Sale

Tax Rules (edit to match your country)

Results

Holding period

Full Working

Where the Gain Goes

Sell Before or After the Long-Term Threshold

Tax at Other Rates

The Calculation

Assumptions this calculator makes

Understanding Capital Gains Tax

What Makes Up Your Cost Base

Why the Holding Period Matters

Allowances and Losses

Reading the Effective Rate

Related Calculators

Negative Amortization Calculator

Ijarah Calculator

Loan Comparison Calculator

Student Loan Payment Calculator

Prepayment Penalty Calculator

HP vs PCP Comparison Calculator