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How to make tax gains on stock market losses

October 23, 2008

Stock markets have tanked big time, spreading widespread, contagious panic, pain and gloom the world over.

For equity investors, the pain is, of course, real though not unusual given that share prices routinely go through bullish and bearish cycles.

An array of preferential tax treatment on equity investment offers some balm to investors bloodied by capital losses.

Tax gains on capital losses

Your investments may not always result in capital gains. A loss from the sale of a long-term capital asset (such as investment in equity or equity mutual funds held for more than 12 months) can only be set-off against long-term capital gains.

On the other hand, a loss from short term capital asset is allowed to be set-off against both short term and long-term capital gains.

How to set-off capital losses...

Image: A sub-broker offers flower to the statue of a bull outside the Bombay Stock Exchange. | Photograph: Indranil Mukherjee/AFP/Getty Images

Also read: Does Capitalism have a future?

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(Excerpt from Intelligent Stock Market Investing  by N. J. Yasaswy. Published by Vision Books.)

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