Unused net capital losses

When you have an allowable capital loss, you need to apply it against your taxable capital gains from the same year. If your loss is greater than your gains, the difference is a net capital loss.

Note: You might have to report a capital loss if you sell a property for less than what you paid for it, and if you had any expenses involved with the sale. For a list of properties that can trigger a capital loss, check out Schedule 3.

You can apply your net capital loss against a taxable capital gain from another year to reduce it – either carry it back to any of the past 3 years, or carry it forward to use in a future year.

To carryback a loss (apply it to a previous year), complete form T1A: Request for loss carryback. Keep in mind that the inclusion rate changes depending on the year your loss is from, and that rate determines how much you can claim from a past year.

If you carried forward a net capital loss, you can claim it in a future year. Keep in mind, the unused net capital loss you claim in a year, can’t be more than your total taxable capital gains for that year.

Note: You have a capital gain when you sell (or are considered to have sold) a capital property for more than the total of its adjusted cost base (ACB) and the outlays and expenses you paid to sell the property. Your taxable capital gain is the portion of the capital gain that you need to report on your tax return.