A capital gains tax (CGT) is a tax placed on a taxpayer’s capital gains, which are profits from the sale of an asset which was purchased at a lower price. If the sale results in a loss then it is known as a capital loss. When a taxpayer sells items that were for personal use, such as a car or jewelry, any gain is taxable but losses are not deductible. However, if a taxpayer sells an item that was an investment any gain is taxable and any loss is deductible.