--- title: Can Long-Term Capital Losses Offset Short-Term Capital Gains? description: Long-term and short-term capital gains have different tax rates. There are IRS restrictions on how these different gains/losses are matched and offset each other. In this article, we go over the ins and outs of offsetting capital gains and losses. image: https://www.realized1031.com/hubfs/Imported%20sitepage%20images/money-house-seesaw-IS-1048402108.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Can Long-Term Capital Losses Offset Short-Term Capital Gains? Posted Oct 25, 2024 ![money-house-seesaw-IS-1048402108](https://www.realized1031.com/hs-fs/hubfs/Imported%20sitepage%20images/money-house-seesaw-IS-1048402108.jpg?width=750&height=501&name=money-house-seesaw-IS-1048402108.jpg) Long-term and short-term capital gains have different tax rates. IRS rules restrict how these different gains/losses are matched and offset each other. In this article, we discuss the ins and outs of offsetting capital gains and losses. ### Short-term Vs. Long-term Capital Gains Short-term capital gains are those held for less than a year. These gains are taxed at the ordinary income tax rate.[ Long-term capital gains](https://www.realized1031.com/blog/what-is-long-term-capital-gains-how-much-is-it-and-how-is-it-taxed) are those held for a year or more and have favorable tax treatment. Tax rates on these gains cap at 20% for high-income earners. Gains are matched with their holding period. If an investor had $20,000 in long-term (LT) gains and $10,000 in LT losses and decides to realize them, the net gain would look like this:   $20,000 - $10,000 = $10,000   The investor will pay LT gains rates on the $10,000 gain. If the above were flipped so that the investor incurred a loss:   + $10,000 - $20,000 = -$10,000 LT loss   Only $3,000 of the LT loss can be declared on the investor’s income taxes. The remaining $7,000 loss is[ carried forward](https://www.realized1031.com/blog/what-are-examples-of-capital-losses) for future use. The same applies to ST gains/losses, except that ST gains will be taxed at your ordinary income tax rate. Notice that we always match LT gains with LT losses and ST gains with ST losses. These categories do not cross over to offset each other. ### Offsetting Long-Term Capital Gains with Short-Term Capital Losses Let’s say that instead of a $10,000 LT loss, the investor had a $5,000 LT loss for the year. They also have the following ST gains:   + $15,000 (ST gain) - $5,000 (ST loss) = +$10,000 ST gain   How does the ST gain factor in with the LT loss? Can one offset the other? The investor’s net gain for the year will be $10,000. We get that figure from:   + $10,000 ST gains - $5,000 LT losses   = +$5,000 ST gains   But at what rate are these gains taxed at? Well, there were no LT gains for the year. So the above gains aren’t taxed at the LT rate. These gains are all ST gains and taxed at the ST gains rate. Remember earlier we said that the ST/LT categories do not cross over? You can see in these examples that ST gains/losses offset each other while LT gains/losses did the same. But once we have the net in each category, we can add them. Only in this case do ST and LT gains/losses offset each other. Let’s say the investor instead had a net ST loss of $5,000 and a net LT gain of $10,000. They would have been taxed on $5,000 at the LT gains rate. To summarize, once LT gains/losses are matched, and ST gains/losses are matched, we can net out these two gains/losses to determine which tax rate applies. The strategic investor might try to ensure that if they have a net gain for the year, it is an LT gain rather than an ST gain. This strategy falls into the category of[ tax loss harvesting](https://www.realized1031.com/blog/what-is-tax-loss-harvesting-and-how-does-it-work). Working with a financial advisor is advisable when matching ST and LT capital gains or trying to accomplish tax loss harvesting. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Hypothetical examples shown are for illustrative purposes only. Download The Capital Gains Tax Calculator [![Cap Gains Calculator For Investors](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg "Estimate the cap gains tax owed ...") ](https://www.realized1031.com/blog/can-long-term-capital-losses-offset-short-term-capital-gains#blogform) Download Calculator ---   --- ### Cap Gains Calculator For Investors ![Download The Capital Gains Tax Calculator](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg) Estimate the cap gains tax owed after selling an asset or property By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Long-term and short-term capital gains have different tax rates. IRS rules restrict how these different gains/losses are matched and offset each other. In this article, we discuss the ins and outs of offsetting capital gains and losses. Short-term Vs. Long-term Capital Gains Short-term capital gains are those held for less than a year. These gains are taxed at the ordinary income tax rate. Long-term capital gains are those held for a year or more and have favorable tax treatment. Tax rates on these gains cap at 20% for high-income earners. Gains are matched with their holding period. If an investor had $20,000 in long-term (LT) gains and $10,000 in LT losses and decides to realize them, the net gain would look like this: $20,000 - $10,000 = $10,000 The investor will pay LT gains rates on the $10,000 gain. If the above were flipped so that the investor incurred a loss: + $10,000 - $20,000 = -$10,000 LT loss Only $3,000 of the LT loss can be declared on the investor’s income taxes. The remaining $7,000 loss is carried forward for future use. The same applies to ST gains/losses, except that ST gains will be taxed at your ordinary income tax rate. Notice that we always match LT gains with LT losses and ST gains with ST losses. These categories do not cross over to offset each other. Offsetting Long-Term Capital Gains with Short-Term Capital Losses Let’s say that instead of a $10,000 LT loss, the investor had a $5,000 LT loss for the year. They also have the following ST gains: + $15,000 (ST gain) - $5,000 (ST loss) = +$10,000 ST gain How does the ST gain factor in with the LT loss? Can one offset the other? The investor’s net gain for the year will be $10,000. We get that figure from: + $10,000 ST gains - $5,000 LT losses = +$5,000 ST gains But at what rate are these gains taxed at? Well, there were no LT gains for the year. So the above gains aren’t taxed at the LT rate. These gains are all ST gains and taxed at the ST gains rate. Remember earlier we said that the ST/LT categories do not cross over? You can see in these examples that ST gains/losses offset each other while LT gains/losses did the same. But once we have the net in each category, we can add them. Only in this case do ST and LT gains/losses offset each other. Let’s say the investor instead had a net ST loss of $5,000 and a net LT gain of $10,000. They would have been taxed on $5,000 at the LT gains rate. To summarize, once LT gains/losses are matched, and ST gains/losses are matched, we can net out these two gains/losses to determine which tax rate applies. The strategic investor might try to ensure that if they have a net gain for the year, it is an LT gain rather than an ST gain. This strategy falls into the category of tax loss harvesting. Working with a financial advisor is advisable when matching ST and LT capital gains or trying to accomplish tax loss harvesting.", "articleSection" : [ "Capital Gains" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2024-10-26T01:18:02+0000", "datePublished" : "2024-10-26T01:18:02+0000", "description" : "Long-term and short-term capital gains have different tax rates. There are IRS restrictions on how these different gains/losses are matched and offset each other. In this article, we go over the ins and outs of offsetting capital gains and losses.", "headline" : "Can Long-Term Capital Losses Offset Short-Term Capital Gains?", "image" : { "@type" : "ImageObject", "height" : 501, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Imported%20sitepage%20images/money-house-seesaw-IS-1048402108.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/can-long-term-capital-losses-offset-short-term-capital-gains", "name" : "Can Long-Term Capital Losses Offset Short-Term Capital Gains?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Imported%20sitepage%20images/money-house-seesaw-IS-1048402108.jpg" } ```