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Capital gains tax |
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Capital gains taxThe tax levied on profits from the sale of capital assets. A long-term capital gain, which is achieved once an asset is held for at least 12 months, is taxed at a maximum rate of 20% (taxpayers in 28% tax bracket) and 10% (taxpayers in 15% tax bracket). Assets held for less than 12 months are taxed at regular income tax levels, and, since January 1, 2000, assets held for at least five years are taxed at 18% and 8%.Capital gains taxA tax placed on the profits from the sale of real estate or investments.Capital gains taxCapital gains tax arises as a result of a 'chargeable event' - in the case of stock market investment, the disposal of shares at a profit.Just because you make a capital gain does not mean you necessarily have to pay tax on the gain. It all depends on your personal tax position, and on whether your total gains for the year are within the annual exemptions. The annual exemption per spouse in the tax year 2002-2003 is £7,700, rising to £7,900 for the 2003-2004 tax year.The gain you make beyond your annual exemption is added to any other income you may have and taxed as additional income at your marginal rate, be it 20% or 40%.Whatever the eventual tax position, it is important to keep records that enable you to calculate the gain on the sale of an asset, and ideally your record-keeping should be in a form that lends itself to completing your Tax Return.The essential information you need for each asset is:Base or original costDate of acquisitionDate of disposalDisposal proceedsWhen you have this information you are in a position to take advantage of indexation, taper relief, losses and your annual exemption.Similar MatchesUnrealized capital gain or lossUnrealized capital gain or lossAn increase/decrease in the value of a security that is not "real" because the security has not been sold. Once a security is sold by the portfolio manager, the capital gain../../finance-glossary/losses are "realized" by the fund, and any payment to the shareholder is taxable during the tax year in which the security is sold. Capital lossCapital lossThe loss in value that the owner of an asset experiences when the price of the asset falls, including when the the currency in which the asset is denominated depreciates. Contrasts with capital gain. Issued share capitalIssued share capitalTotal amount of shares that have been issued. Related: Outstanding shares. Real capitalReal capitalWealth that can be represented in financial terms, such as savings account balances, financial securities, and real estate. CapitalCapitalThe overall assets of an individual less liabilities.Money injected into a company by way of share capital and loan capital plus retained earnings. Further SuggestionsCapitalCapital flow Financial capital Morgan Stanley Capital International Europe, Australia, Far East Index Capital scarce Small capitalization (small cap) fund Venture Capital Leveraged recapitalization Capital Fulcrum Point Long-term capital Capital-using Investment Company with Variable Capital Capital intensive Capital lease capital assets Working capital ratio Capital Capital allocation decision Complete capital market Capital market line (CML) Capital expenditure Long Term Capital Gain Personal tax view (of capital structure) capital adequacy Perfect capital market |
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