Capital Loss
A capital loss happens when you sell a stock for less than you paid.
Quick Reference:
Sale price – Purchase price = Negative. Can offset gains. Opposite to capital gain.
Expanded Explanation:
If you buy shares for $5000 and later sell them for $3000, the $2000 difference is a capital loss. While losses are never fund, they can reduce your tax bill by offsetting capital gains made on other investments.
In Australia, if your losses are bigger than your gains in one year, you can carry the leftover loss forward to future years. This means losses can still provide some benefit even though the investment didn’t work out. For beginners, it’s important to track both gains and losses for tax time. A capital loss is a reminder that investing involves risk, and diversification helps reduce the impace of any single loss.
Note: commentary on taxation is relevant at the time of writting this page (23/09/2025). Seek profesional tax advice.