Definition

Noun The financial loss that occurs when the selling price of a capital asset (such as a stock, bond, or real estate) is less than its original purchase price. This loss is officially "realized" for tax purposes only when the asset is sold.

Usage

"Capital loss" is used primarily in financial, investment, and tax contexts to describe a specific type of financial loss on an investment. It is the opposite of a "capital gain."

Examples

• The investor reported a capital loss of $2,000 after selling the shares for less than he paid for them.
• You can use a capital loss from selling one stock to offset the capital gain from selling another, reducing your overall tax bill.
• The sharp decline in the market's value turned many paper gains into realized capital losses.

Advanced Usage

• Net capital loss: The total amount by which capital losses exceed capital gains in a given tax year.
  • If your net capital loss is more than the annual limit, you can carry the excess forward to future tax years.
• Realized vs. Unrealized Loss: A "capital loss" typically refers to a loss after a sale. A decrease in an asset's value while you still own it is an "unrealized" or "paper" loss.
  • She decided not to sell the property, so the decline in value remained an unrealized loss, not a capital loss for her taxes.

Variants and Related Words

• Capital gain (n): The profit from the sale of a capital asset.
• Loss harvesting (n): The strategic selling of securities at a loss to offset a capital gains tax liability.

Synonyms

• Financial loss (on an investment)
• Realized loss

Antonyms

• Capital gain
• Profit

Noun

1. the amount by which the purchase price of an asset exceeds the selling price; the loss is realized when the asset is sold