An allowable capital loss refers to the excess of the cost of an asset over the proceeds received on its disposal. Both individuals and companies may set capital losses against capital gains to establish tax liability.
A capital gain represents the profit realized from the sale of an asset where the selling price exceeds the original purchasing price. This gain is often subject to capital gains tax, depending on the jurisdiction and applicable legal provisions.
Indexation is the practice of adjusting the chargeable gain from the sale of an asset to take account of inflation over the period of ownership, and the policy of connecting economic variables like wages, taxes, and pensions to rises in the general price level.
