Capital Loss

The loss incurred when a capital asset (investment or real estate) decreases in value. This loss is not realized until the asset is sold for a price that is lower than the original purchase price.

A capital loss is essentially the difference between the purchase price and the price at which the asset is sold, where the sale price is lower then the purchase price.

For example, if an investor bought a house for $250,000 and five years later sells the house for $200,000. The investor would realize a capital loss of $50,000.


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Related Terms

Capital Asset

Capital Gain

Realized Loss

Realized Profit

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