Capital Gains Tax (CGT) is a federal fee one pays on the profit made from selling certain types of assets. These include stock investments or real estate property primarily but may also include sale of machinery etc. A capital gain is calculated as the total sale price minus the original cost of an asset. CGT only becomes due once one sells his/her investment. For example, you won’t owe tax while stock gains value inside your portfolio. However, once you sell your shares, the profit must be reported on your tax returns. As a result, you pay a tax on profit at the current capital gains rate. Under current federal taxation policy, CGT rate applies only to profits from sale of assets held for more than a year (long-term capital gains). The rates are 0%, 15%, or 20%, depending on the taxpayer’s tax bracket for the particular year.