Are stock market losses tax deductible
Particularly in the last year (2008) and at the beginning of this year, many investors sometimes made significant losses from stock transactions or other investments due to the financial and economic crisis. The question therefore naturally arises whether these losses can at least be deducted for tax purposes. The general rule is that pure losses from speculative transactions cannot be deducted, but even after the withholding tax has been introduced, it is possible that losses can be offset against speculative profits. The exchange rate losses must, however, also be offset against exchange rate gains; offset against income from interest or dividends is not possible. Anyone who only made losses and no profits in 2009, for example, can carry out a so-called loss carryforward until 2013. This means that the losses are reported in the income tax return, but since there are no profits to be offset, the losses are carried over to the next year. So if, for example, you achieved price gains from speculative transactions in 2011, then the losses from 2009 can be offset against this, so that the tax burden is reduced.
So how does the tax deductibility of losses work in practice? Assume that Mr. Mustermax made a price loss of 1,500 euros in 2009 from speculative transactions. In addition, on the other hand, he was also able to achieve a profit of 800 euros with a business, which also comes from a speculative transaction. Mr. Mustermax can offset these two values in his income tax return for 2009, so there is a loss of 700 euros. Mr. Mustermax can now have these 700 euros carried over to the next year as part of a loss carryforward. If he now achieves a profit of at least 700 euros from speculative transactions in 2010, the loss can be offset against this. If he achieves less profit, for example 300 euros, then the same principle would be used as for 2009, namely that the 300 euros profit can be offset against the "remaining losses" from 2009 of 700 euros. The remaining 400 euros in losses can be carried forward into the next year. If there are no further profits to be offset by 2013, then the remaining loss would no longer be taken into account for tax purposes, because from 2014 a loss carryforward is only possible for speculative transactions with real estate.
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