what is a capital loss carryover 
capital loss carryover is the net amount of capital losses eligible to be carried forward into future tax years net capital losses the amount that total capital losses exceed total capital gains can only be deducted up to a maximum of 3 000 in a tax year net capital losses exceeding the 3 000 threshold may be carried forward to future tax years until exhausted there is no limit to the number of years there might be a capital loss carryover 12understanding capital loss carryovercapital loss carryovers allow a taxpayer to capture losses from one period and use them in a future income tax period capital loss tax provisions lessen the severity of the impact caused by investment losses however the provisions do not come without exceptions investors must be careful of wash sale provisions which prohibit repurchasing an investment within 30 days of selling it for a loss if a repurchase occurs the capital loss cannot be applied toward tax calculations and is instead added to the cost basis of the new position lessening the impact of future capital gains 3tax loss harvesting provides a means of improving the after tax return on taxable investments it is the practice of selling securities at a loss and using those losses to offset taxes from gains from other investments and income depending on how much loss is harvested losses can be carried over to offset gains in future years 1 tax loss harvesting often occurs in december with dec 31 being the last day to realize a capital loss taxable investment accounts identify realized gains generated for the year so the investor seeks to find unrealized losses to offset those gains doing so allows the investor to avoid paying as much in capital gains tax if the investor wants to repurchase the same investment they must wait 31 days to avoid a wash sale 3for example suppose a taxable account currently has 10 000 of realized gains that were made during the calendar year yet within its portfolio is abc corp stock with an unrealized loss of 9 000 the investor may decide to sell the stock prior to the end of the year in order to realize the loss if the abc corp stock was sold on or prior to dec 31 the investor would realize 1 000 10 000 gains 9 000 abc corp loss in capital gains abiding by the wash sale rule if the stock was sold on dec 31 the investor would need to wait until jan 31 to repurchase it advantages and disadvantages of capital loss carryoveran individual s capital loss carryover expires at their death however it can be put to use in the final tax return filed for that person often results in tax savings as otherwise unbeneficial losses can be used in future periodsresults in somewhat flexible timing as carryovers can be used in future periods when it is more beneficialmay be used in long term tax planning strategiesmay help guide investment decisions as investors can still benefit from lossescan only be deducted up to certain limits each year making it potentially a long time before a full carryover can be fully recognizedrelevant tax laws may change negatively impacting long term tax strategiescan only be used in periods where an investor also has capital gains or ordinary income to offsetcan be an administrative burden as details must be tracked over time