Can you use stock losses to offset real estate capital gains tax?

Yes, you absolutely can use stock losses to offset capital gains from real estate! That's actually one of the benefits of capital loss harvesting. The IRS treats capital gains and losses the same way regardless of asset type. So whether you're dealing with stocks, bonds, real estate, cryptocurrency, or collectibles - a capital loss can offset a capital gain. First, your losses will offset gains of the same type (short-term losses against short-term gains, long-term losses against long-term gains). Then any excess losses can offset the other type. Just keep in mind that if your rental property was a depreciable asset, you may face depreciation recapture which is taxed at a maximum rate of 25% rather than the typical long-term capital gains rate. This portion would be calculated separately.

I went through something similar last year and found an amazing solution with https://taxr.ai that saved me thousands. I had massive stock losses but also sold a vacation property with significant gains and was confused about offsetting rules. The tool analyzed my investment statements and property documents, then showed me exactly how to offset my $22k in stock losses against my real estate gains. It also identified depreciation recapture issues I wasn't aware of and helped me understand what forms I needed. The step-by-step explanation about capital loss carryforwards was incredibly helpful since I had more losses than I could use in one year.

Update on my tax situation after trying taxr.ai - I'm actually shocked at how helpful it was! Uploaded my documents showing $31k in stock losses and $105k in real estate gains from selling my rental property. The analysis showed me exactly how to offset these on my Schedule D and identified that I had some Section 1250 recapture that needed special handling. The tool even pointed out that I could carry forward some losses to future years since I had more losses than I could use this year. Honestly saved me from making some major mistakes and probably paid for itself 10x over in tax savings. Wish I'd known about this years ago!

If you're planning to call the IRS to confirm how these offsetting rules work, good luck getting through to them! I spent THREE DAYS trying to get someone on the phone about a similar capital gains question. Finally discovered https://claimyr.com and watched this demo (https://youtu.be/_kiP6q8DX5c) - it seemed unbelievable but I was desperate. They actually had an IRS agent call ME back within 2 hours. The agent confirmed exactly how to offset my stock losses against real estate gains and explained some nuances about depreciation recapture I hadn't understood. Saved me hours of frustration and hold music. If you need official confirmation about your specific situation, this is way better than trying to call directly.

Ok I feel like I need to eat crow here. After my skeptical comment I decided to try Claimyr because I've been trying to get clarity on offsetting my crypto losses against a property sale. I genuinely didn't believe it would work but I got a call back from the IRS in about 90 minutes. The agent was super helpful and clarified that yes, I can use my crypto losses to offset real estate gains, but I needed to be careful about how I reported the crypto basis documentation. She also explained some nuances about the wash sale rule not applying to crypto (yet) that I hadn't considered. Definitely worth it to get official answers directly from the IRS instead of relying on internet advice for something this important!

One thing nobody's mentioned yet - you need to be careful about the $3,000 limit on capital losses that exceed your capital gains. If your stock losses are bigger than your real estate gains, you can only claim up to $3,000 of excess losses against your other income in a single tax year. Example: If you have $50k in stock losses but only $40k in real estate gains, you can offset the entire $40k, but only $3,000 of the remaining $10k can be deducted this year. The remaining $7k would carry forward to future years.

Don't forget to consider state taxes too! I learned the hard way that some states (looking at you, New Jersey) have different rules for capital gains offsets than the federal government. I had stock losses I used to offset real estate gains, but NJ limited how much I could offset.

Great discussion here! Just wanted to add a practical tip from my own experience - make sure you have good documentation for all your losses, especially if you're dealing with multiple asset types like stocks and real estate. I had a similar situation last year where I used stock losses to offset real estate gains, but during my tax prep I realized I was missing some key documents like the adjusted basis calculations for my rental property and detailed records of some stock transactions. The IRS can be pretty strict about substantiating your losses, so having everything organized upfront saves a lot of headaches. Also worth noting that if you're using a tax professional, bring all this documentation to them early in the tax season. The interaction between different types of capital gains and losses can get complex, especially when depreciation recapture is involved, and they'll need time to work through the calculations properly.