What can you use capital losses against?
James Olson
Updated on March 14, 2026
Usually, allowable capital losses are set against chargeable gains, reducing the amount of the gain. However, where a loss has been made on unquoted shares, the loss may be able to be set against income instead of gains.
Do capital losses have to be used?
It is necessary to apply any available capital losses for the current income year first and then any unapplied net capital losses for previous income years.
What happens if you make a capital loss?
What happens if I make a capital loss? You’d make a capital loss on your assets if you sold them for less than you paid for them. If you make a capital loss, you can use it to reduce a capital gain in the same financial year.
When do you have a capital loss on an investment?
An asset or investment that is held for a year to the day or less, and sold at a loss, will generate a short-term capital loss. A sale of any asset held for more than a year to the day, and sold at a loss, will generate a long-term loss. When capital gains and losses are reported on the tax return,…
How are short term and long term capital losses treated?
“A short-term loss you carry over to the next tax year is added to short-term losses occurring in that year. A long-term loss you carry over to the next tax year is added to long-term losses occurring in that year. A long-term capital loss you carry over to the next year reduces that year’s long-term gains before its short-term gains.
How are losses used to offset capital gains?
Losses on your investments are first used to offset capital gains of the same type. So short-term losses are first deducted against short-term gains, and long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other kind of gain.
How are capital losses treated on the sale of a property?
The sale price is less than what you paid to acquire it. Capital losses on the sale of investment property are tax-deductible, although losses resulting from the sale of personal property are not. Numerous rules apply. Suppose you sold two investments last year.
