Capital Gains Opportunity Cost
Is it worth selling an asset to invest elsewhere? Find the breakeven return.
What this calculator helps you do
Compare whether holding your current investment or reallocating it after paying capital gains taxes makes more sense. The calculator shows the return the new investment must earn to break even, so you know when switching is worthwhile.
- Current Investment Value is what the asset is worth today.
- Original Cost Basis is what you paid for it, including fees.
- Capital Gains Tax Rate is the percentage of profit that will be taxed when you sell.
Your analysis will appear here
Fill out the form to calculate the breakeven return.
The Breakeven Formula
To determine if selling is worthwhile, the calculator finds the return a new investment needs to achieve to match the outcome of simply holding the current one. This "required outperformance" is calculated in two steps:
- First, it calculates the Tax Hurdle Rate. This is the immediate performance needed from your post-tax capital just to earn back the money paid in taxes.
- Second, it accounts for the opportunity cost. The money paid in taxes can no longer grow. This formula adjusts the hurdle rate upwards to compensate for the lost future growth of that tax money.
$$ \text{Required Outperformance} = \left( \frac{\text{Tax Cost}}{\text{Post-Tax Capital}} \right) \times (1 + \text{Expected Growth of Current Asset}) $$
Note: This is a simplified model and does not account for inflation, dividend income, or potential tax-loss harvesting benefits.