How do you use a capital loss?
You have a capital loss when you sell, or are considered to have sold, a capital property for less than its adjusted cost base (ACB) plus the outlays and expenses involved in selling the property.
For information on calculating your capital gain or loss, see Calculating your capital gain or loss.
Generally, if you had an allowable capital loss in a year, you have to apply it against your taxable capital gain for that year. If you still have a loss, it becomes part of the computation of your net capital loss for the year. You can use a net capital loss to reduce your taxable capital gain in any of the 3 previous years or in any future year.
Our Summary of loss application rules chart indicates the rules and annual deduction limit for each type of capital loss.
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Example
In 2024, you sold two different securities resulting in a taxable capital gain of $225 (50% x $450) and an allowable capital loss of $375 (50% x $750). After applying your allowable capital loss against your taxable capital gain, you are left with $150 ($375 – $225) of unapplied allowable capital losses for 2024.
The inclusion rate for 2024 is 50%. While you cannot deduct the $150 from other sources of income in 2024, it becomes part of the computation of your net capital loss for 2024. You can carry this net capital loss back to apply against taxable capital gains in any of the 3 previous years or carry it forward to any future year.
To carry back or carry forward the loss, complete Schedule 3 and attach it to your 2024 income tax and benefit return. This ensures your net capital loss is updated on the CRA's records and available for future use.
Note
When determining your capital losses, special rules apply if you disposed of any of the following:
Inclusion rate
The rate used to determine "taxable capital gains", "allowable capital losses" and "allowable business investment losses" is called an inclusion rate (IR). The IR has changed over the years. As a result, the amount of net capital losses of other years that you can claim against your taxable capital gain depends on the IR that was in effect when the loss and the gain were incurred. Also, the way you apply these losses may differ if you incurred them before May 23, 1985. For more information, see Applying your net capital losses of other years to 2024.
If you had a capital loss or gain in 2024, you must complete Schedule 3, Capital Gains or Losses.
| Period net capital loss incurred | Inclusion Rate |
|---|---|
| Before May 23, 1985 | 1/2 (50%) |
| After May 22, 1985, and before 1988 | 1/2 (50%) |
| In 1988 and 1989 | 2/3 (66.6666%) |
| From 1990 to 1999 | 3/4 (75%) |
| In 2000 | IR* |
| From 2001 to 2024 | 1/2 (50%) |
* This rate is from line 16 in part 4 of Schedule 3 for 2000, or from your notice of assessment or latest notice of reassessment for 2000.
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