What is capital gains tax? How is it calculated?

[Good-Person]

Capital gains tax is a kind of tax which is imposed when the value of the asset increases. When you sell the asset, you may be required to pay a tax for that. This tax is mostly imposed on fixed asset, but it could be imposed on any other kind of asset as well. So, how is it calculated?

 

[Kane]

You invested $1000 on stocks and made $100 in profit by selling stocks. Your capital gain will be $100. You will have to pay capital gain taxes on this amount. One of the reasons why most financial advisors advise you not to sell your assets is because you will have to pay capital gain taxes. They suggest you collect dividends instead.