Unrealized Loss in Stock Market?

Question

Will I still required to pay capital gain tax if my Unrealized Loss in stock market is bigger than the Realised Profit by the time I file income tax?

Answer 1

Unrealized losses or gains have no tax consequences. Gains and losses are only reported for taxes when you sell. And it's not a matter of happening before you file, it's the tax (normally calendar) year you are filing for.

So yes, in your example, you'd pay tax on the realized gains. The unrealized losses aren't losses for tax purposes unless and until you actually sell at a loss.

Answer 2

I believe that if you sell your stocks and the loss is larger than the gains, you can deduct some of the the loss from your taxes. The amount you can deduct depends on your tax bracket.

If your loss exceeds $3000, you cna carry the excess forward into next year and use that amount as a deduction then.

Your decisions to sell and take a loss should be based on your best estimate of the future of each stock, and on your financial needs; i.e, paying off a high interest loan or a huge medical bill, etc.

Answer 3

To take the loss for tax purposes, you will have to sell the loser. It would be smarter to just hang on to it and pay tax on your gains.