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

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center