Net Proceeds

AAA

DEFINITION of 'Net Proceeds'

The amount received by the seller after all costs and expenses are deducted from the gross proceeds arising from the sale of an asset. Depending on the asset sold, such costs may either account for a marginal percentage of the gross proceeds, or a substantial percentage of it. Capital gains taxes are generally paid only on the net proceeds of a sale, rather than the gross proceeds.

INVESTOPEDIA EXPLAINS 'Net Proceeds'

For example, in the case of a security sale, net proceeds represent proceeds from the sale minus trading costs, such as commissions. Assuming that the security seller routes the order through a discount broker for a commission of $10, the sale of 100 shares of a stock trading at $25 would result in gross proceeds of $2,500, and net proceeds of $2,490; the difference between the two is only 0.4%.
However, in the case of a real-estate sale, the difference between gross proceeds and net proceeds is likely to be significantly higher - a percentage figure in the low to mid single digits - since the seller has to pay for realtor commissions, legal fees and other closing costs.

RELATED TERMS
  1. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  2. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  3. Closing

    The end of a trading session. The closing of a trading day halts ...
  4. Formal Tax Legislation

    The process by which a proposed tax rule or tax change may become ...
  5. Land Value

    The value of a piece of property, including both the value of ...
  6. Net Loss

    The result that occurs when expenses exceed the income or total ...
Related Articles
  1. What is the double taxation of dividends? ...
    Taxes

    What is the double taxation of dividends? ...

  2. The Impact Of U.S. Corporate Taxation ...
    Taxes

    The Impact Of U.S. Corporate Taxation ...

  3. Taxation Rules For Bond Investors
    Taxes

    Taxation Rules For Bond Investors

  4. Capital Gains Tax 101
    Taxes

    Capital Gains Tax 101

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center