Capital Loss

What is a 'Capital Loss'

A capital loss is the loss incurred when a capital asset (investment or real estate) decreases in value. This loss is not realized until the asset is sold for a price that is lower than the original purchase price.

BREAKING DOWN 'Capital Loss'

A capital loss is essentially the difference between the purchase price and the price at which the asset is sold, where the sale price is lower than the purchase price.

For example, if an investor bought a house for $250,000 and sold the house five years later for $200,000, the investor would realize a capital loss of $50,000.

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