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
Jul 9, 2025
Few terms in personal finance are as important, or used as frequently, as “risk.” Nevertheless, few terms are as imprecisely defined. Generally, when financial advisors or the media talk about investment risk, their focus is on the historical price volatility of the asset or investment under discussion.
Jul 7, 2025
As Americans get their grills and beach chairs ready for the July 4th holiday, the stock market and the weather across much of the country have both been on heaters. Stocks and bonds continue to effectively navigate a complex policy landscape shaped by evolving trade dynamics, geopolitical tensions, and fiscal stimulus. The market’s resilience in … Continue reading “Market Update – America Gets Record High Stock Prices for Its Birthday”
Jun 20, 2025
Birthdays may seem less important as you grow older. They may not offer the impact of watershed moments such as getting a driver’s license at 16 and voting at 18. But beginning at age 50, there are several key birthdays that can affect your tax situation, health-care eligibility, and retirement benefits.
Jun 18, 2025
During times like these when geopolitical headlines can be unsettling for investors, we at LPL Research like to remind ourselves of one of our key investing principles. Markets have always faced challenges —ranging from geopolitical conflicts and economic downturns to natural disasters, political upheaval and health crises. These events often trigger short-term volatility and shake … Continue reading “Why Long Term Investing Beats Selling in Volatile Times”
Jun 16, 2025
Are you concerned about the inheritance taxes your heirs may have to pay? Then you may want to consider creating charitable lead trusts.
Top of Page
Services
Epic Capital provides the following comprehensive financial planning and investment management services: Learn More >
Find us on:
Copyright © 2026 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.