When you sell shares, you need to calculate the cost price in order to file a correct tax return. For many investors, this is one of the most confusing steps, but at its core, it's about finding out what your shares have actually cost you. With the right method, it's easier to calculate both gains and losses and get a handle on your taxes.
What does cost amount mean?
The cost amount is the price you paid for the shares, including fees such as brokerage. It is therefore the amount you use as a starting point when calculating the profit on a sale. Without it, it's difficult to know how much profit or loss you made and how much tax you should pay. Understanding the cost amount is therefore very important to ensure that you file your tax return correctly.
Different ways of counting
There are two methods used to calculate the cost amount. If you have bought the same share several times, you can use the average method. This involves adding up all purchases and dividing by the number of shares to arrive at an average price. If you don't have enough documentation, we recommend the standardized method, which uses a percentage of the sale price instead. Both methods are approved by the Swedish Tax Agency and designed to make it easier to calculate correctly.
Make the calculation smoother
The more you keep track of purchases and sales, the easier it will be to calculate the overheads. That's why it's important to keep records, keep track of brokerage costs and use the right method to calculate them.
Calculating overheads is a fundamental part of being an investor and with the right knowledge and structure, it becomes easier to do the calculation, and you get a clear picture of how your trades actually affect the economy.
Contact us
For those who are unsure, a stock broker from us at Monitor Capital Markets be a valuable support. We have extensive experience in share trading and help investors to understand how expense ratios work in practice. This makes tax returns more manageable and allows you to focus on developing your investments.
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