Explore commonly used personal finance terms.
An allowable capital loss is a financial loss from the sale of an asset that can be deducted against capital gains to reduce taxable income. In many tax systems, only a certain amount of capital loss can be deducted per year, with any excess carried forward to offset future gains. This deduction is beneficial for investors as it reduces the overall tax burden, allowing them to recover some financial loss from underperforming investments. Understanding allowable capital loss limits helps in tax planning and investment decision-making.
