capital gains tax

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Word: Capital Gains Tax

Definition: Capital gains tax is a type of tax that you have to pay on the profit you make when you sell something valuable, like stocks or real estate (like a house). If you buy something for a certain price and sell it for a higher price, the money you made from that sale is called a "capital gain," and the tax you pay on that gain is the capital gains tax.

Usage Instructions

• When to use: You use this term when discussing taxes related to profits made from selling investments or valuable property.
• How to use: It is commonly used in financial discussions, especially in contexts involving investments, taxes, or economic policies.

Example

• "When he sold his house for a profit, he had to pay a capital gains tax on the money he made."

Advanced Usage

• Short Selling: This is a strategy where an investor sells stocks they do not own, hoping to buy them back at a lower price. This can be a way to avoid capital gains tax, but it is a more complex financial strategy.

Word Variants

• Capital Gain: This refers to the profit made from selling an asset. For example, "The capital gain from selling my stocks was quite significant."
• Capital Loss: This is when you sell an asset for less than what you paid for it. You can sometimes use capital losses to offset capital gains for tax purposes.

Different Meanings

• While "capital gains tax" specifically refers to taxes on profits from investments, "capital" on its own can also refer to money or assets used to start or maintain a business.

Synonyms

• There aren’t exact synonyms for "capital gains tax," but you might hear terms like "investment tax" or "profit tax" in certain contexts.

Idioms and Phrasal Verbs

• There are no specific idioms or phrasal verbs that directly relate to "capital gains tax," but it is often discussed alongside terms like "cash in" (to make a profit) or "write off" (to deduct expenses from income).

Summary

In summary, capital gains tax is the tax you pay on the profit made from selling something valuable.

Academic

Noun

1. a tax on capital gains
   • he avoided the capital gains tax by short selling