Capital Losses
When Property Is Sold at a Loss
A capital loss occurs when the adjusted basis exceeds the amount realized from selling a capital asset. Tax laws often limit how capital losses may be used to offset income.
- Capital losses may offset capital gains.
- Excess losses may be subject to annual limitations.
- Unused losses may sometimes be carried to future tax years, depending on tax law.
Not every loss provides an immediate tax benefit.
Summary
Capital losses can reduce taxable gains, but their use is often limited by law.