How do you use a capital loss? You have a capital loss when you sell, or are considered to have sold, a capital property for less than its adjusted cost base plus the outlays and expenses involved in selling the property.

For information on calculating your capital gain or loss, see How do you calculate your capital gain or loss?

Generally, if you had an allowable capital loss in a year, you have to apply it against your taxable capital gain for that year. If you still have a loss, it becomes part of the computation of your net capital loss for the year. You can use a net capital loss to reduce your taxable capital gain in any of the three preceding years or in any future year.

Unused 2007 net capital losses can be carried back to 2004, 2005, and 2006 without adjustment, but if unused net capital losses of other years are carried forward and applied to your 2007 taxable capital gains, you have to determine your adjustment factor, because the inclusion rate may have changed.

Our Summary of loss application rules chart indicates the rules and annual deduction limit for each type of capital loss.

Note
When determining your capital losses, special
rules apply if you disposed of:

depreciable property; or
personal-use property.
Forms and publications
Capital Gains guide (T4037)
Schedule 3, Capital gains (or losses)
Form T1A, Request for a loss carryback
IT232 - Losses - Their deductibility in the loss year or in other years
Related topics
Lines 217 and 228- Business investment loss
Line 253 - Net capital losses of other years
Line 254 - Capital gains deduction
Net capital losses for a deceased person