Legal and information
Glossary
The terms used on the calculators for the UK, United States, Ireland, Australia and Canada, each defined in a sentence or two with the current figure where one applies. Figures are read from the same dated rate files as the calculators.
The terms
- Capital gain
- The profit on selling an asset: the sale proceeds less what it cost to buy, improve and sell. Tax is charged on the gain, not on the sale price.
- Capital gains tax (CGT)
- A tax on the gain when a chargeable asset such as property is sold or given away. The UK, Ireland, Australia and Canada use the term; the United States taxes capital gains through income tax at separate long-term rates.
- Chargeable gain
- The gain that remains after reliefs such as main-residence relief have been deducted, before any annual allowance or discount.
- Annual exempt amount (UK)
- The amount of gains a person can make in a tax year before UK capital gains tax is due, £3,000 in 2026/27. It cannot be carried forward.
- Personal exemption (Ireland)
- The first €1,270 of gains in a year that is exempt from Irish capital gains tax for each individual. It cannot be transferred to a spouse.
- Private Residence Relief (UK)
- Relief that removes the share of a gain covering the period a property was your only or main home, plus the final 9 months of ownership.
- Principal Private Residence relief (Ireland)
- The Irish equivalent of main-home relief. The last 12 months of ownership count as occupation, and the relief covers up to one acre of grounds.
- Main residence exemption (Australia)
- Exempts a dwelling that was your main residence, on up to 2 hectares of land. A partial exemption is worked out by the days it was and was not your home.
- Six-year rule (Australia)
- A former home that is rented out can be treated as your main residence for up to 6 years after you move out, keeping it exempt, provided no other property is treated as your main residence for the same period.
- Principal residence exemption (Canada)
- Exempts the share of a gain equal to one plus the number of years a property is designated as your principal residence, divided by the years you owned it. Only one property per family per year can be designated.
- Section 121 exclusion (United States)
- Allows up to $250,000 of gain on a main home, or $500,000 for a married couple filing jointly, to be excluded from tax if you owned and lived in the home for at least 2 of the last 5 years.
- CGT discount (Australia)
- A 50% reduction in a capital gain for an Australian resident individual who owned the asset for at least 12 months, applied after capital losses.
- Inclusion rate (Canada)
- The fraction of a capital gain that is added to taxable income. It is one-half (50%); the proposed increase to two-thirds was cancelled in March 2025.
- Taxable capital gain (Canada)
- The part of a capital gain that is included in income, being the gain multiplied by the inclusion rate.
- Net capital gain (Australia)
- The amount added to assessable income after capital losses and the CGT discount have been applied.
- Long-term capital gain (United States)
- A gain on an asset held for more than one year, taxed at the federal rates of 0%, 15% or 20% depending on taxable income, rather than at ordinary income rates.
- Net Investment Income Tax (United States)
- An additional 3.8% tax on the lesser of net investment income or modified adjusted gross income above $200,000 for a single filer or $250,000 married filing jointly.
- Depreciation recapture (United States)
- Tax on the depreciation previously claimed on a rental property when it is sold, at up to 25%.
- Cost base / adjusted cost base
- What an asset cost for tax purposes: the purchase price plus buying costs and capital improvements. Australia says cost base; Canada says adjusted cost base; the United States says basis.
- Allowable costs / outlays and expenses
- Costs that reduce the gain: agent and legal fees, stamp duty or land transfer tax paid on purchase, and capital improvements. Repairs, maintenance and mortgage interest do not qualify.
- Enhancement expenditure (Ireland)
- Irish term for capital spending that adds value to a property and is deductible when working out the gain, such as an extension, but not repairs.
- Indexation relief (Ireland)
- Multiplying costs incurred up to 31 December 2002 by an inflation factor for the year they were incurred, before working out the gain.
- Probate value
- The market value of a property at the date of death. In the UK it is the cost used when the person who inherits the property later sells.
- Stepped-up basis (United States)
- The rule that inherited property takes a basis equal to its value at the date of death, so only growth after that point is taxed.
- No-gain, no-loss transfer
- A transfer between spouses or civil partners that is treated as made at cost, so no gain arises on the transfer and the recipient inherits the original cost.
- Flipping rule (Canada)
- Treats the profit on a residential property held for less than 365 consecutive days as fully taxable business income rather than a capital gain, unless a listed life event applies.
- 60-day reporting (UK)
- The requirement to report and pay UK capital gains tax on a residential property within 60 days of completion, through an HMRC Capital Gains Tax on UK property account.
- Basic-rate band (UK)
- The band of income and gains taxed at the basic rate, £37,700 above the £12,570 personal allowance in 2026/27. Gains that fit within the unused part are taxed at 18%.
- Medicare levy (Australia)
- A 2% levy on taxable income that applies in addition to income tax, including on a net capital gain.
- Quebec abatement (Canada)
- A refundable reduction of 16.5% of basic federal tax for residents of Quebec.