Friday, 22 January 2016

Capital Gains Tax

When anything is "taxed", a portion of its value is removed and funnelled through government to be used [or as some might say abused!] in a different area of the government or the economy. When this value is "removed", two possibilities occur; the original owner of the value now has less value, or the next owner or "purchaser" of the value must pay more to compensate for the tax amount. Supply and demand will determine which of these scenarios play out. Often, a compromise occurs somewhere in the middle.

Capital gains is a form of income tax. It is considered to be income that occurs as a result of a Capital investment. A Capital investment is an investment in "future" productivity, such as shares in company or a working building or rental property. Most "business" investments are considered Capital investments. When these investments are sold, the difference between the amount originally paid plus any later improvements and the amount realized upon the sale is referred to as the Capital gain.

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