Capital Loss Limitations

Capital loss limitations refer to the rules governing how much you can deduct from your taxable income when you sell an investment at a loss. In the U.S., you can offset your capital gains with your capital losses, reducing the amount of tax you owe. If your losses exceed your gains, you can deduct up to $3,000 ($1,500 if married filing separately) from your ordinary income in a given year. Any remaining losses can be carried forward to future years to offset future gains or income, providing tax relief over time.