What Is a Capital Loss?
A capital loss occurs when an asset is sold for less than its cost basis. In the United States, capital losses first offset capital gains; if losses exceed gains, up to 3,000 a year (1,500 if married filing separately) can offset other income, and any remainder carries forward to future years.
Realized vs. Unrealized Losses
A loss counts for tax purposes only when the asset is actually sold. A decline in value on an asset still held is an unrealized loss.
Wash-Sale Rule
A loss is generally disallowed if a substantially identical security is bought within 30 days before or after the sale.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Child Tax Credit
- Dependent (Tax)
- Depreciation
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.