Hello there, I currently have some mututal funds that I would like to redeem inspite the fact that the money I have in the funds are far less than the money that I have put in. I estimated the loss would be around $5K – $6K. I just thought to take it out to put it in better use.
My question is, can I claim the loss on my tax return? I currently don’t own a house but am in the process of building one, which should be completed before the year end.
Any answers would be appreciated. Thanks!
You can use your capital losses to offset other capital gains. If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed is limited to $3,000, or $1,500 if you are married filing separately. If your net capital loss is more than this limit, you can carry the loss forward to later years.
Yes, you claim a loss on mutual funds on Schedule D. You’ll show the amount you took out, the original cost of those shares, and the loss.
Up to $3000 of net capital gains loss can be taken each year against ordinary income. If your net loss for all schedule D transactions is more than that for the year, you can carry over the remainder to the next year, and deduct it then against your income from that year, and so on for subsequent years until you use it up.
Yes, you can claim the loss on schedule D of your tax return. You will need to know the cost basis on the mutual funds and the sale proceeds to come up with the exact loss. More than likely your broker should give you a printout at year end showing all the “realized gains/losses”. You are limited to deducting $3,000 per year for capital losses ($1,500 if married filing separately), but can carryforward the unused loss until you use it. You should also see what the rules are for the state you live in regarding capital losses if your state has a state income tax.
The above answers are all mostly correct.
I believe the 1st response is slightly incorrect as I do believe you can take $3,000 of net capital losses against any income source (whether it be capital gains or ordinary income). Any unused capital loss can be carried forward indefinately til its used up.
Of course though, if you have any capital gains on the year, you’ll want to use the capital losses to erase the gains 1st so you don’t get taxed on the gain.
Therefore, let’s say you have 5k in capital gains & 5k in capital losses. You can wipe out the entire capital gain with your losses. If you had 5k in gains & 10k in losses, you can still erase the 5k in gains and claim an additional 3k of losses against ordinary income.