Advertisement
When you sell an investment, you may experience a capital loss. Find out what this means and how you can use it to owe less tax.
A capital loss occurs when an asset, such as a stock or a real estate property, decreases in value. The loss is “realized” when the asset is sold for a lower price than what the seller paid for it. (Similarly, a capital gain is realized when you sell an asset that has increased in value since the time of purchase.)
You don’t pay tax on a capital loss. Even better, you can use a capital loss to offset tax on another asset’s capital gain. Fifty percent of the value of the capital loss is allowable, meaning that you can apply it against any capital gains in the same year. If you have any allowable capital loss leftover, it becomes part of your net capital loss for the year. You can apply your net capital loss to any taxable capital gains in the previous three years or in a future year.
Example: “I bought my rental property for $800,000. I sold it for $700,000, giving me a capital loss of $100,000.”
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
You’ve reached your 40s, are mid-way in your career and realize you’ll never have a pension. Here’s how to...
Reverse mortgages do the job of freeing up income for house-rich, cash-poor Canadian seniors. But their terms are often...
The inflation reading gives some economists more confidence that the Bank of Canada will cut its benchmark interest rate...
Many parents loan or gift money to their adult children for real estate purchases. Here are the legal and...
Whether you want the highest interest rate or no service fees, these savings accounts will meet your needs.
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
Have an RESP, now what? If you’re wondering how to withdraw that money to pay for school (or not),...
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
Falling U.S. inflation leads to rate cut certainty, Walmart’s strong quarter, Barrick beats Franco-Nevada for the gold metal, and...
