Content

• Steps
• Tips
• Warnings

Capital gains are the returns on investments such as stocks, bonds, and real estate. This is the difference between the purchase price and the sale price. If you have an investment that, when sold, can bring you a profit, it means that you have unrealized capital gains. You receive realized capital gains as a result of the sale of investment objects. You can calculate capital gains in these ways.

Steps

1. 1 Calculate the adjusted present value. The original purchase price, or the price of capital that you inherited or donated, is called the initial value. If you add or remove funds (such as taxes), you will receive an adjusted present value.
   • Positive changes for capital investment or restoration of property increase its value, so these indicators must be added to the original price.
   • Decrease in the value of property or assets reduces the value of your capital and therefore needs to be subtracted from the original value. The price of personal assets can only go down if they are partially involved in business - then they will only be partially depreciated.
2. 2 Calculate the capital gains after selling your investment. To do this, do the following:
   • Subtract the adjusted present value from the selling price. In cases where the initial cost has not been adjusted, it is this price that is subtracted from the selling price.
   • Subtract additional costs of the sale: commissions, taxes (e.g. sales tax, excise taxes, real estate tax) and other costs (e.g. shipping costs, equipment installation and testing, registry fees, payments based on dispute resolution decisions).
3. 3 Find out the amount of capital gains taxes before you make a capital gains profit. Taxes will also depend on how long you held the investment before selling. Short-term capital gains refer to investment objects that you have held for 1 year or less. Long-term capital gains refer to assets that you have held for more than 1 year.
4. 4 Calculate your net profit. This can be done in two ways.
   • From the price at which you sold your investment, subtract the cost of sale and, if any, the remaining debt. You will have a gross profit margin.
   • Subtract income tax from gross profit. This will give you a net profit.

Tips

• If the loss on the sale exceeds the capital gains, you can apply for a tax refund.
• When you calculate your income net of taxes, your losses can cancel out your profits.
• Capital investment tax may be lower than regular income tax. Capital gains in this case means that you are making long-term gains that exceed long-term losses.

Warnings

• You should be aware of possible penalties for paying low taxes.
• Don't expect taxes to stay the same next year. Monitor your annual tax changes regularly.