1. A loss can only be claimed on a tax return for investment assets, not for personal assets. Personal assets are assets such as a home or car. Gains from personal assets are still taxed, but losses cannot be claimed (although an exclusion is available for the sale of a home).
2. Capital losses reduce income. Capital losses are claimed on line 7 of Form 1040 (in parentheses). They lower your income, which in turn can produce a lower tax.
3. Capital losses are limited to the lesser of $3,000 or your total net loss. To figure your capital losses you’ll first need to list your sales on Form 8949, then transfer your short-term and long-term net gains/losses to Schedule D, where you’ll figure your limit and any possible carryover losses.
the Confident Taxpayer 