Capital losses watch the timing

Nobody wants to make a loss but if it’s inevitable, you should know how to utilise it to reduce your tax bill. Capital losses can be offset against capital gains reducing your taxable income but you need to get the timing right.

If you sell an investment and make a capital loss, this loss can only be offset against current year capital gains or carried forward against future year capital gains. The key thing to understand is that you cannot carry back a capital loss to a previous tax year.


Judy sold some high performing investments in June 2021. This brought her into the high tax bracket and she paid 47% tax on the net gain! She sold underperforming investments in July 2021 and made a substantial capital loss.

Unfortunately, the capital loss cannot be offset against the gains made in June 2021 as you cannot carry capital losses back to a previous year.

𝐓𝐈𝐏 𝐎𝐅 𝐓𝐇𝐄 𝐃𝐀𝐘: If you are holding a hopeless investment, consider disposing of it in the same year as you dispose of your investments that make a gain (or before it). This way you can offset the capital loss against the capital gain, reducing your capital gain tax.

However, commercial considerations first, tax considerations second!

Like any tax advice make sure you get help for your specific situation. If you are a business owner and you are overwhelmed, I’ve got your back.

Simply provide a few details below and I’ll schedule in a FREE 15 minute appointment to discuss your situation.