Capital Gains Tax Calculator

Capital gains tax (CGT) is levied on the profit realised when a capital asset is sold for more than its original purchase price. The taxable gain is the difference between the sale price and the cost basis of the asset, which typically includes the original purchase price plus any eligible acquisition costs. Not all asset disposals produce a taxable gain: if the sale price is below the cost basis, the result is a capital loss, which may be used to offset gains from other disposals in the same tax year.

The rate at which capital gains are taxed depends on two factors that this calculator accounts for directly: the holding period and the taxpayer’s income level. Most major economies distinguish between short-term gains, arising from assets held for less than one year, and long-term gains, arising from assets held for one year or more. Short-term gains are typically taxed at the same rates as ordinary income. Long-term gains receive preferential rates in most jurisdictions, reflecting a deliberate policy choice to incentivise long-term investment.

How Capital Gains Tax Is Calculated

The capital gain is calculated as: Gain = Sale Price − Purchase Price. In the United States, short-term capital gains are taxed as ordinary income at the marginal rate applicable to the taxpayer’s total taxable income (10% to 37%). Long-term capital gains are taxed at 0%, 15%, or 20% depending on taxable income, with the 20% rate applying only to taxpayers in the highest income brackets.

The net proceeds after tax is: Net Proceeds = Sale Price − Tax Payable. For an asset purchased at 10,000 and sold at 15,000 after more than one year, a taxpayer in the 15% long-term CGT bracket pays 750 in tax and retains 14,250. If the same asset were sold before the one-year mark, and the taxpayer’s marginal income tax rate is 22%, the tax liability rises to 1,100 and net proceeds fall to 13,900.

How to Use This Calculator

Enter the purchase price (cost basis) of the asset you sold. Enter the sale price you received. Select whether the holding period was short-term (under one year) or long-term (one year or more). Choose the applicable tax rate for your situation. The capital gain, tax payable, and net proceeds update instantly.

The results panel shows the gross capital gain before tax, the estimated tax payable at the selected rate, the net proceeds you retain after tax, and the effective tax rate on the gain. The donut chart visualises the proportion of the total sale price retained versus remitted as tax, which frames the real after-tax return on the asset.

For assets with transaction costs such as brokerage commissions, stamp duty, or legal fees, adjust the purchase price upward by the acquisition costs and reduce the sale price by disposal costs. Adding costs to the purchase price increases the cost basis and reduces the taxable gain. Subtracting disposal costs from the sale price reduces the realised proceeds and the gain further. Both adjustments are generally permissible under most tax codes and reduce CGT liability.

Short-Term Versus Long-Term Capital Gains

The distinction between short-term and long-term holding periods is the single most consequential structural variable in capital gains taxation. In the United States, an asset held for exactly 364 days and then sold is a short-term gain and taxed at the ordinary income rate. An asset held for 366 days and sold at the same price is a long-term gain taxed at a maximum of 20%, and often at 15% or 0% depending on income.

In India, the distinction varies by asset class. For listed equity shares and equity mutual funds, gains from assets held for more than one year are long-term capital gains (LTCG) taxed at 10% above 100,000 (no indexation benefit). Short-term gains on the same assets held under one year are taxed at 15%. For real estate and debt mutual funds, the holding period thresholds and rates differ.

In the United Kingdom, capital gains are taxed at 10% or 18% for basic-rate taxpayers and 20% or 24% for higher-rate taxpayers, depending on the asset type. The annual CGT exemption (12,300 until April 2023, subsequently reduced to 3,000) allows gains below that threshold to be realised tax-free each year.

Cost Basis and How It Affects Your Gain

Cost basis is the total amount considered as the original investment in an asset for tax purposes. For a direct purchase, the cost basis is typically the purchase price plus any acquisition costs (brokerage fees, stamp duty, transfer taxes). For inherited assets, the cost basis in the US is stepped up to the fair market value at the date of the original owner’s death, which often eliminates a significant embedded gain.

For assets acquired through multiple purchases over time (such as shares bought in several lots), the cost basis method used determines the taxable gain. First-in First-out (FIFO) treats the earliest purchased units as sold first. Specific Identification allows the taxpayer to designate which lot was sold, which can be used to select the highest-cost basis and minimise the taxable gain. Weighted Average Cost pools all purchase prices and averages them.

In inflationary environments, some jurisdictions permit indexation of the cost basis: the original purchase price is adjusted upward by a price inflation index to account for the erosion of purchasing power during the holding period. The indexed cost basis produces a lower taxable gain by effectively recognising that part of the nominal gain is attributable to inflation rather than real asset appreciation.

Capital Loss Harvesting

A capital loss occurs when an asset is sold for less than its cost basis. Capital losses can be used to offset capital gains realised in the same tax year, reducing the net taxable gain. If capital losses exceed capital gains in a given year, the excess loss can typically be deducted against ordinary income up to a specified limit and the remainder carried forward to offset future gains.

Tax-loss harvesting is the deliberate strategy of selling assets that have declined in value to realise a capital loss that can be offset against gains elsewhere in the portfolio. The loss reduces the current year’s CGT liability without necessarily eliminating the exposure to the underlying asset, since the proceeds can be reinvested in a similar but not identical asset (wash-sale rules in some jurisdictions prohibit re-purchasing the same security within 30 days of the loss sale).

Use this calculator to model the tax impact of specific disposals under consideration. Knowing the after-tax proceeds from a proposed sale before executing it allows you to make informed decisions about the sequencing of gains and losses across the tax year, particularly if you are also considering realising losses elsewhere in the portfolio to offset the gain.

CGT on Property and Real Estate

Real estate capital gains are subject to CGT in most countries, though primary residence exemptions significantly reduce the effective burden for homeowners. In the United States, gains of up to 250,000 (500,000 for married couples filing jointly) on the sale of a primary residence are excluded from CGT if the taxpayer owned and occupied the property for at least two of the five years preceding the sale.

For investment property, the full gain is generally taxable. In the US, depreciation recapture applies to commercial and rental property: the portion of the gain attributable to previously claimed depreciation deductions is taxed at a maximum rate of 25%, regardless of the taxpayer’s marginal rate. This rule requires separate calculation from the standard capital gain computation.

Property transaction costs including solicitor or conveyancing fees, estate agent commissions, and improvement expenditures that added value to the property are generally eligible additions to the cost basis, reducing the taxable gain. Keeping records of all capital improvement expenditures throughout the ownership period is essential for accurate CGT calculation at the time of eventual disposal.