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.
You can claim your unused net capital losses in a future year. To claim a portion or all of your unused net capital losses from a previous year on your 2018 return, enter the amount on the Unused net capital losses page in H&R Block’s tax software. Keep in mind, this amount can’t be more than your total taxable capital gains for the year. You can find your available net capital losses on your most recent notice of assessment (NOA).
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.
Residents of Québec
If you’re a resident of Québec, you can claim a deduction for net capital losses from before 2018 on form TP-729-V, provided they weren’t from the sale of personal-use or precious property and weren’t already deducted in a previous year. This includes carrying forward net capital losses from a previous year, or the unused portion of a business investment loss, if that portion became a net capital loss and is being carried over for the first time. Since losses must be carried forward in the order they occurred, the oldest loss needs to be carried over first.
As a rule, a net capital loss can only reduce the capital gains for the carry-forward year. However, you may use losses from before May 23, 1985 to reduce income from other sources, but only up to $1,000.
Keep in mind that if you’re requesting an adjustment to your investment expenses for the year, the information you enter on the net capital losses page of H&R Block’s tax software will impact your Schedule N.
Where do I claim this?
Follow these steps in H&R Block's 2018 tax software:
- Under the PREPARE tab, click the IN THIS SECTION icon.
- In the Investments box, click the Add This Topic button.
- Click the PENSION PLANS AND INVESTMENTS icon. You'll find yourself here:
- Under the INVESTMENT INCOME heading, select the checkbox labelled Unused net capital losses, then click Continue.
- When you arrive at the Unused net capital losses page, enter your information into the tax software.