Capital loss

This is when an asset decreases in value. The loss is calculated when you sell it, meaning that if you purchased a stock or bought a rental property two years ago and want to sell it now for less than the price you paid for it, it’ll be counted as a capital loss.

Example: Let’s say you invest $150,000 in a fixer-upper rental property you want to flip and rent out. If something horrible happens, you find that you can’t fix it up, and you have to sell it for $120,000, you’ll have a capital loss of $30,000.