Glossary

A capital loss occurs when the value of an investment, such as stocks, bonds, or real estate, decreases between the time you bought it and the time you sold it. 😞

If you sell an investment for less than you paid for it, you've experienced a capital loss. Depending on your local tax laws, you may be able to use capital losses to offset capital gains and reduce your overall tax liability.

For example, if you bought a stock for $1,000 and later sold it for $800, you'd have a capital loss of $200.

Fun fact: In some countries, capital losses can be "carried forward" or "carried back" to offset gains in other tax years. ⏳ This tax strategy can help smooth out your tax bill by spreading losses over multiple years, providing some relief during periods of poor investment performance.