Step-by-Step Guide

How to Calculate Capital Gains Tax in 2026

Understanding capital gains tax is crucial for every investor. This guide explains how to calculate your tax liability and use portfolio tracking tools to simplify tax reporting.

Step-by-Step Instructions

Understand Capital Gains Basics

Capital gains tax is paid on the profit from selling investments. The gain is the difference between sale price and cost basis.

Capital gain = Sale price - Purchase price - Costs
Short-term gains (held < 1 year) are taxed as ordinary income
Long-term gains (held > 1 year) get preferential tax rates
Losses can offset gains (tax-loss harvesting)

AllInvestView automatically calculates gains using the correct cost basis method for your jurisdiction.

Choose Your Cost Basis Method

The cost basis method determines which shares are "sold" when you have multiple purchase lots.

FIFO (First In, First Out) - Default in most countries
LIFO (Last In, First Out) - Sells newest shares first
Specific Identification - Choose which lots to sell
Average Cost - Uses average price of all shares

Check your country's tax rules - UK uses share pooling, Australia uses FIFO by default, US allows specific identification.

Track All Buy and Sell Transactions

Accurate transaction records are essential for calculating gains correctly.

Record purchase date, price, and quantity for every buy
Include transaction costs (commissions, fees, stamp duty)
Track corporate actions (splits, mergers, spin-offs)
Note any adjustments to cost basis

Import trades from your broker to AllInvestView for automatic cost basis tracking.

Calculate Your Gains and Losses

For each sale, calculate the gain or loss using your cost basis.

Match sold shares to purchased shares using your cost basis method
Calculate proceeds minus cost basis for each lot
Separate short-term and long-term gains
Apply any allowable deductions

AllInvestView generates detailed capital gains reports showing each transaction and the calculation method.

Apply Tax Rules and Exemptions

Most countries offer tax-free allowances or special rules that can reduce your tax bill.

UK: Annual CGT allowance (£6,000 in 2026)
US: Long-term capital gains rates (0%, 15%, 20%)
Australia: 50% CGT discount for assets held > 12 months
Germany: Sparerpauschbetrag (€1,000 single / €2,000 married)

AllInvestView supports customizable tax rules for your specific jurisdiction.

Generate Tax Reports

Create reports for your tax return showing all realized gains and losses.

Summary of total gains and losses by holding period
Detailed transaction-by-transaction breakdown
Wash sale adjustments (if applicable)
Reports formatted for your tax authority

AllInvestView generates tax reports compatible with HMRC, ATO, CRA, IRS, and other tax authorities.

Frequently Asked Questions

When do I pay capital gains tax?

You pay CGT when you sell an investment for more than you paid. Tax is due on your annual tax return - you don't pay tax on unrealized gains.

Can I offset losses against gains?

Yes, capital losses can offset capital gains in most countries. Some jurisdictions allow carrying losses forward to future years.

What about wash sale rules?

In the US, the wash sale rule disallows a loss if you buy the same security within 30 days before or after the sale. AllInvestView detects wash sales automatically.

How do I handle foreign currency investments?

Calculate gains in your local currency. Both the purchase and sale must be converted using the exchange rate on each respective date.

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