Capital Loss

This is generally a loss from the sale of investment property such as stocks, bonds and land. Losses must first offset other sales in the same year that resulted in capital gains. Then, up to $3,000 ($1,500 for married individuals filing separately) can be deducted against other types of income. Any excess (referred to as capital loss carryover) can be carried over to future years until used up. It should be noted that losses from the sale of personal use property are not allowed for tax purposes; although, gains must be reported. This rule would apply to the taxpayer’s home, second home, cars, etc.