What is the implication of capital gains tax for property sellers?

The correct answer is that capital gains tax taxes the profit made from the sale. When a property owner sells real estate for more than what they paid for it, the profit—the difference between the sale price and the original purchase price—is subject to capital gains tax. This means that the tax is assessed on the gain realized from the sale of the property, and not on the total sale price or the purchase price itself. Sellers need to be aware of this tax liability as it will affect the net proceeds they receive after the sale.

Understanding capital gains tax is crucial for property sellers as it can significantly impact their financial outcome from the transaction. It's important for sellers to factor this tax into their financial planning when deciding whether to sell a property or how to set the sale price.