So if you bought a stock for $1,000 and sold it for $2,000, you would realize a capital gain of $1,000. How capital gains are computedĪ capital gain is computed by subtracting the purchase price of an asset from the selling price. Tax efficiency is an important aspect of managing your investments and growing your net worth. Which assets qualify for capital gains tax?Ĭapital gains taxes are owed when an asset, such as investment securities, real estate or an investment property, is sold for more money than was paid for the asset. Sales taxes, meanwhile, are typically paid at the point of purchase when we buy retail goods and some services.īut there’s another kind of tax that’s often not as well-understood: capital gains taxes.
Income taxes are automatically withheld from pay or paid by independent contractors, self-employed individuals and some others based on how much money is earned. Most people are familiar with two ways we pay taxes: income taxes and sales taxes.
