Tax, fees & accounts
Capital gains tax
Also called CGT
Tax on the profit made when you sell an investment for more than you paid.
How it works
Tax is normally due only on realised gains, in the tax year of the disposal. Rules on rates, allowances and holding periods vary enormously between countries.
Many jurisdictions tax long-held assets at a lower rate than short-term ones, which creates a real incentive to hold.
Where it misleads people
Nothing here is tax advice, and the rules differ by country and by personal circumstance. The general principles are stable; the specifics require someone who knows your jurisdiction.
Related terms
- Capital gainThe profit made when you sell something for more than you paid for it.
- Cost basisWhat you actually paid for a holding, including fees — the number every gain or loss is measured from.
- Tax lotOne purchase of a security, tracked separately with its own date and price.
- Tax-loss harvestingSelling a losing holding to realise the loss and offset it against taxable gains.
- Wash saleA rule disallowing a tax loss when you repurchase the same security too soon after selling.
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.