capital gains tax

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Definition

Noun: A tax levied by a government on the profit realized from the sale of a non-inventory asset. The gain is the difference between the asset's purchase price (its cost basis) and its selling price. This tax specifically applies to the financial gain, not the total sale amount.

Usage

This term is used in financial, legal, and economic contexts to refer to a specific government levy on investment profits. It is typically discussed in relation to personal finance, investment strategy, and fiscal policy.

Examples
  • The investor calculated his capital gains tax liability after selling the stock.
  • Long-term investments often benefit from a lower capital gains tax rate.
  • One must report all proceeds from property sales to determine capital gains tax.
Advanced Usage
  • "To be liable for capital gains tax": To have a legal obligation to pay this tax.
    • You will be liable for capital gains tax if you sell the house for more than you paid.
  • "Capital gains tax exemption": A provision that allows certain gains to be excluded from taxation.
    • The primary residence capital gains tax exemption saved them thousands of dollars.
Variants and Related Words
  • Capital Gain (n): The profit itself from the sale of the asset, which is the subject of the tax.
    • His capital gain on the vintage car was substantial.
  • Capital Loss (n): A decrease in the value of an investment, which can sometimes be used to offset gains for tax purposes.
Synonyms
  • Investment tax (This is a broader, less precise synonym, as capital gains tax is a specific type of tax on investment profits).
Related Phrases
  • Short-term capital gains tax: Tax applied to profits from assets held for one year or less.
  • Long-term capital gains tax: Tax applied to profits from assets held for more than one year, usually at a preferential rate.
Noun
  1. a tax on capital gains
    • he avoided the capital gains tax by short selling