Unrealized Capital Gains and Losses
Nov 8, 2021
For many investors, it can be tempting to think of one’s portfolio in terms of “capital gains” or “capital losses.” True, this is a central concept to understanding market behavior, but to truly maximize your investing knowledge, you also need to know about “unrealized gains,” “unrealized losses,” and how they can work to your advantage. As always, the following information is not intended as tax or legal advice. Any financial decision should be undertaken in consultation with your financial advisor and is not intended as tax or legal advice. Ready to learn more? Read on.
The simplicity of unrealized losses and capital gains.
Put simply, an unrealized loss or gain is the change in market value of a stock from its purchase price. An “unrealized loss” occurs when a stock decreases after an investor buys it, but they have yet to sell it. An “unrealized gain” is when a stock increases in value, but an investor has yet to sell it. It really is as simple as that.
When unrealized gains and losses become realized.
However, things become a bit more complicated if an investor sells stock that is currently valued higher, or lower, than their purchase price. When this occurs, the “unrealized” aspect becomes realized and renamed “capital gains” or “capital losses.”
“Capital losses” can be a good thing.
Capital losses may be used to offset capital gains. If the losses exceed the gains, up to $3,000 of those losses may be used to offset the taxes on other types of income.This loss is limited to $3,000 per year, or $1,500 if married and filing a separate return. Should you have more than $3,000 in such capital losses, you may be able to carry the losses forward. You can continue to carry forward these losses until such a time that future realized gains exhaust them. Under current law, the ability to carry these losses forward is lost only on death.
For more insights and resources, be sure to sign up for our Weekly Market Commentary. Follow our YouTube channel where we regularly post our Epic Market Minute videos. Follow us on LinkedIn, or like us on Facebook. And as always, please don’t hesitate to reach out to a dedicated service professional at Epic Capital.
Tags: Financial Planner Charlotte NC, Investments
More Insights
Apr 4, 2025
April showers came a month early as stocks fell in March. Tariffs were the primary cause of the market jitters, although that uncertainty became too much for markets to shrug off once economic data started to weaken.
Apr 2, 2025
A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully.
Mar 31, 2025
Losing a spouse is a stressful transition. And the added pressure of having to settle the estate and organize finances can be overwhelming. Fortunately, there are steps you can take to make dealing with these matters less difficult.
Mar 28, 2025
Families are one of the great joys in life, and part of the love you show to your family is making sure that their basic needs are met. While that’s only to be expected from birth through the high school years, many households are helping their adult children well into their twenties and beyond at … Continue reading “Retirement and Adult Children”
Mar 26, 2025
Life insurance can be an excellent tool for charitable giving. Not only does life insurance allow you to make a substantial gift to charity at relatively little cost to you, but you may also benefit from tax rules that apply to gifts of life insurance.
Top of Page
Services
Epic Capital provides the following comprehensive financial planning and investment management services: Learn More >
Find us on:
Copyright © 2025 Epic Capital Wealth Management. All Rights Reserved.
Securities offered through LPL Financial. Member FINRA/SIPC.
The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: CA, CO, DC, DE, FL, GA, IN, LA, MD, MO, MS, NC, NJ, NY, PA, SC, TN, TX, VA, VT, WA.