What’s a Capital Gain & a Capital Loss?

 
 
 

What’s a Capital Gain & a Capital Loss?

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In a non-retirement account, like a Joint, Trust, or Individual account (and even in a bank account if you purchase a CD or other investment expected to grow in value), when you sell an investment for more than you purchased it, you experience a capital gain.  When you sell an investment for less than you purchased it, you experience a capital loss. Capital gains can be netted out against capital losses, but you owe capital gains tax on all capital gains in the year you sell those investments. Capital losses can be “carried forward” and used in small amounts each year to cancel out capital losses. You should not expect to always be able to cancel out all gains.


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InvestingErica Hartwick