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A capital loss happens when you sell an investment, like a stock or a piece of property, for less money than you originally paid for it.
In Depth
This loss applies to assets like stocks, bonds, or real estate. It's the opposite of a capital gain. While nobody wants to lose money, capital losses can sometimes be used to offset capital gains, potentially reducing your tax bill. The IRS has specific rules about how much loss you can claim each year.
Example
If you bought shares of a company for $1,000 and later sold them for $700, you would have a capital loss of $300.