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I am trying to better understand how long after a capital gains loss, you can offset value against a capital tax gain. The Government website states;

When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year. You do not have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset.

does this mean one of the two scenarios below is correct?;

Scenario 1: You must claim your losses within 4 years of them occurring and, you must also use the losses within that time. If any gains are made after those 4 years then, these losses cannot be used to offset the tax.

Scenario 2: You must claim your losses within 4 years of them occurring but, once they have been claimed you can then use them at any point in the future to offset tax for any gains?

  • My guess is scenario 1. – Dan Bracuk Feb 5 at 21:05
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    You must declare the loss within 4 years, however, once declared they can be carried forward indefinitely. Simply include a note each year with your return stating that you are carrying forward X-amount of losses from the previous year. – user41790 Feb 5 at 21:11
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You can carry losses forward indefinitely. Or, at least, until they change the tax law again:

The 20-year carryforward period has been replaced with an indefinite carryforward period

https://www.bpcpa.com/newsletters/business-and-net-operating-losses-changes-for-2018/

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