How much can capital loss carryover be used to deduct capital gains?

Forum|Forum|11 months ago
April 15, 2025
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Suppose in Year 1, I have a long-term capital loss of $10,000. I use the $3,000 to offset my ordinary income in year 1 and carryover the remaining $7,000 to future years.

Now suppose in Year 2, I have long-term capital gains of $18,000.

My question is: how much of the capital gains in Year 2 can I offset using my capital losses from Year 1?

My understanding of capital loss carryover limitation is that the $3,000 limit only applies to ordinary income. Does the same limit apply to capital gains?

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Best answer by Vanessa A

If you have capital gains in the following year of $10,000 and have a capitol loss carryover of $10,000, then you can use the entire amount to offset your gains. You can use all of your capital loss carryover to offset gains. After your gains are eradicated, you can then use $3,000 to offset ordinary income.

VolvoGirl

According to y our example you would have 10,000 loss carry over to year 2. 13,000-3,000=10,000 not 7,000.

You get to first offset the loss against any gains you have each year so that can use more of it up. Then after applying the loss to the current gains if there is still a loss, you can take a max loss of 3,000 per year.

So you can use up all the 10,000 Carryover Loss to the 18,000 gain and only have 8,000 taxable gain on your tax return.

DawnC

Your net capital gain/loss is calculated by subtracting your capital losses from your capital gains (Schedule D). If you have a net capital loss, you can deduct up to $3,000 per year as a capital loss. Losses beyond that amount can be deducted on future returns as a capital loss carryover until the loss is used up.

How is a capital gain or loss calculated?

You can't choose which tax years to apply your carryover to. Carryovers from this year's return must be applied to next year's.

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user1845401Author

This does not answer my question. Your answer should list a dollar amount. Nothing more, nothing less.

VolvoGirl

I gave you amounts. You can use all of it against your 2024 gains. The whole 10,000.

VolvoGirl

Did you change the original question a little? Don’t know why my first post said you had 13,000? Year 2 you can use the whole 7,000 Capital Loss Carryover against the 18,000 gain giving you a net taxable gain of $11,000 and nothing to carryover to the 3rd year.