Capital Loss Limits

Today TaxMama hears from Sal in New York, who has a gripe. “How many years has the maximum capital loss deduction been set at $3,000? To me it seems like forever. Don’t you think $3,000 is stingy, unfair and unrealistic in today’s investment world? How was that amount arrived at?

Why is no one speaking up about this when it’s so obviously out of date and adds complexity with carryovers? A more equitable ruling for people over 65, would be to permit net capital loss deductions, determined by ones life expectancy, similar to IRA distributions. “

Hi Sal,

Interesting point.

I just pulled out a 1980 IRS Package X (catalog of printable forms) and the Schedule D shows a limit of $3,000. So I don’t know how long this has been going on, but it’s been a long time.

Do you know that you can submit suggestions to the Taxpayers Advocate?
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Nina E. Olson makes recommendations to Congress about proposed law changes each year. It’s probably too late for this year’s report.
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But get the ball rolling and it could be included in next year’s report.

I did submit your suggestion, but consider submitting a note yourself. You can use this link.

And you can submit the idea to your legislators and the White House here:

Actually, if I’d been awake, I would have suggested that this be changed for everyone – not just seniors.

After all, back in 1980 and before, $3,000 was a heck of a lot of money. It was a 10% – 20% down payment on a home. Today, it’s the property tax.

You’re right. It’s well past time to update that limit. Besides, these days, many people are sitting on large loss carryovers.

I invite everyone to submit a note to your own legislators – and even the Advocate’s office.

And remember, you’ll find answers to lots of questions about changing tax laws and other tax information, free. Where? At

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