To put it simply, a capital gain is any profit on the sale of an investment or investment property. On the contrary, a capital loss is any loss on the sale.
Capital gains can include the sale of a house that isn't your main residence, sale of shares or sales of units in a unit trust. If capital assets are held for longer than 12 months, they are eligible for a 50% discount on the capital gain.
Worked examples of Capital Gains/Losses are below:
- You purchased some shares for $300 in 2009 and sold them for $500 in 2016. Capital Gain is Sale of Shares less Cost of Shares:
Sale of Shares - $500
Less Cost of Shares - $300
Capital Gain = $200
Discounted Capital Gain ($200 x 50%) = $100
- You purchased a Rental Property for $600,000 in 2013 and sold the property for $500,000 in 2016:
Sale of the Property: $500,000
Less Cost of the Property: $600,000
Capital loss: $100,000
Please note that Personal assets such as your house, motorbikes, boats etc are exempt from Capital Gains Tax.