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What is Capital Gains Tax?
A Simple Explanation
A capital gain refers to the increase in the value of a capital asset when it is sold. Put simply, a capital gain occurs when you sell an asset for more than what you paid for it. Any profit or gain that arises from the sale of a capital asset is a capital gain. This gain is charged to tax in the year in which the transfer of the asset takes place.
Types of Capital Gains Tax
There are two main types of capital gains tax: short-term and long-term. Short-term capital gains tax is charged on the sale of assets held for less than a year. Long-term capital gains tax is charged on the sale of assets held for more than a year. The rates of capital gains tax vary depending on the type of asset sold and the length of time it was held.
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