Capital Loss Carryover

What is a 'Capital Loss Carryover'

A capital loss carryover is the net amount of capital losses that aren't deductible for the current tax year but can be carried over into future tax years. Net capital losses (total capital losses minus total capital gains) can only be deducted up to a maximum of $3,000 in a given tax year. Any amounts exceeding $3,000 can be put toward offsetting capital gains in the current year or simply deducted in the next year(s).

BREAKING DOWN 'Capital Loss Carryover'

Capital loss provisions can take some of the sting out of a losing investment, but investors must be careful of wash sale provisions, which prohibit repurchasing an investment within 30 days of selling it for a loss. If this occurs, the capital loss cannot be applied toward tax calculations, and is instead added to the cost basis of the new position, lessening the impact of future capital gains.
 

RELATED TERMS
  1. Short-Term Loss

    A capital loss realized on the sale or exchange of a capital ...
  2. Capital Gains Tax

    A type of tax levied on capital gains incurred by individuals ...
  3. Long-Term Capital Gain Or Loss

    A gain or loss from a qualifying investment owned for longer ...
  4. Capital Gains Treatment

    The specific taxes assessed on investment capital gains as determined ...
  5. Tax Selling

    A type of sale whereby an investor sells an asset with a capital ...
  6. Recognized Loss

    When an investment or asset is sold for less than its purchase ...
Related Articles
  1. Taxes

    Here's How to Deduct Your Stock Losses From Your Tax Bill

    Learn the proper procedure for deducting stock investing losses, and get some tips on how to strategically take losses to lower your income tax bill.
  2. Taxes

    Capital Losses and Tax

    When an investment sells for less than its purchase price, the difference is a capital loss.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Investing Basics

    Purge Your Portfolio

    Ignoring a big tax bill will only increase your pain. Fortunately, there are ways to diffuse the tax time bomb before it explodes.
  5. Professionals

    Netting Capital Gains and Losses and Wash Sales

    FINRA/NASAA Series 66: Section 3 Netting Capital Gains and Losses and Wash Sales. This section explains wash sales and steps for netting capital gains and losses.
  6. Investing

    Top Tips for Deducting Stock Losses

    Investors who know the rules can turn their losing picks into tax savings. Here's how to deduct your stock losses.
  7. Your Clients

    Here's the Best Way to Skirt Capital Gains Taxes

    Taxpayers who know the rules for netting gains/losses can generate additional losses to net against the taxable gains in their portfolios. Here's how.
  8. Professionals

    Netting Capital Gains and Losses and Wash Sales

    NASAA Series 65: Section 13 Netting Capital Gains and Losses and wash sales. In this section steps in netting capital gains/losses, and wash sales and ways to avoid the wash sale rule.
  9. Professionals

    Selling Mutual Fund Shares

    FINRA/NASAA Series 66 Section 2 - Selling Mutual Fund Shares. This section discusses the tax impact of selling mutual fund shares such as tax rate, holding period, cost basis, netting capital ...
  10. Investing Basics

    Understanding the Capital Gains Tax

    A capital gains tax is imposed on the profits realized when an investor or corporation sells an asset for a higher price than its purchase price.
RELATED FAQS
  1. How do I avoid paying excess taxes on securities I have sold?

    If you dispose of securities during the tax year, the profit or losses from the transaction are either capital gains or losses. ... Read Answer >>
  2. Is there a difference between capital gains and dividend income?

    Selling something for a profits leads to capital gains. A payment made by a corporations to stockholders is a dividend. Both ... Read Answer >>
  3. Are capital gains taxed differently in different countries?

    Learn about capital gains taxes in the Unites States as well as those of other countries, where these tax rates vary significantly. Read Answer >>
  4. What is the difference between financial capital and economic capital?

    Read about the differences between types of financial capital, which companies use to raise money, and economic capital models ... Read Answer >>
  5. What is the difference between income tax and capital gains tax?

    Understand the difference between a person's income tax and his capital gains tax. Learn when a person needs to pay taxes ... Read Answer >>
  6. Why is it that under some circumstances, capital expenditure cannot be tax-deducted ...

    Understand the meaning of capital expenditures, and learn what the implications are for companies resulting from tax laws ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center