How do you use a capital loss?

Author: Patricia Day, CPA, CA, CBV, TEP, Partner, Ginsberg Gluzman Fage & Levitz, LLP, Ottawa, ON, DFK Affiliate Firm

You have a capital loss when you sell a capital property for less than its cost and the outlays and expenses involved in selling the property.

Generally, if you have a capital loss in a year, you have to apply it against your capital gains for that year. If you still have a net loss, one-half of it becomes your net capital loss for the year. You can use a net capital loss to reduce your taxable capital gain in any of the three preceding years or in any future year.

2015 net capital losses can be carried back to 2012, 2013, and 2014 to offset your taxable capital gains in those years. If it is carried forward, and the inclusion rate changes for capital gains in the future (currently 50% of the capital gain is taxable), the net capital loss carried forward will also be adjusted.

When determining your capital losses, special rules apply if you dispose of depreciable property (such as a building or equipment) or personal use property (items that you own primarily for personal use, such as automobiles, boats, and cottages).

Do you have a capital loss you need to report? Contact us, and one of our experts will be glad to setup a meeting with you.


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