If you trade securities on the stock market, surely this has happened to you at some point (or will happen to you!), so you have surely asked yourself this question: is it possible to compensate for the loss of assets in the income statement? 

How is the capital loss calculated?

To calculate what can be compensated in the next income statement, you have to calculate the difference between the transfer value and the acquisition value. This last concept is made up of the price paid, plus the purchase expenses and commissions and less the amount obtained from the subscription rights sold during the holding of the shares .

How is the capital loss compensated in the income statement?

To understand how this loss is compensated in the declaration, it is necessary to review two concepts:

  • Capital gain or capital gain: exists when a share is sold at a higher price than it was bought.
  • Disability or equity loss: occurs when an operation is closed with the sale of shares at a price lower than the one purchased.

The income statement allows capital gains to be compensated with losses suffered in the investment in the Stock Market. That is, the shareholder or bondholder will have the option of paying less taxes for the losses suffered. In the event that the entire capital loss item is not consumed in the 2017 income tax return, it can be reserved to reduce capital gains in the 2018, 2019 and 2020 financial years.

What can be compensated?

Capital gains can be offset, such as selling a flat. If the balance continues to be positive, up to 20% of the returns on the movable capital (such as interest ) can be offset.

If there is a surplus left over without compensation, during the following four years up to 25% of the positive balance of the returns on movable capital can continue to be compensated.

case study

An investor who has lost #10,000,000 naira and this year sells a house with a profit of #20,000,000: he could offset this gain and pay income tax for #19,000,000 naira. 

An investor has lost #10,000,000 and has no capital gains and would not have had any profit from the sale of anything but would have obtained transferable income of #10,000,000 naira: he could deduct 20% of these, that is, #2,000,000. For this, he would pay taxes on #8,000,000 naira and he would have 8,000,000 naira left that he could continue compensating in the remaining years.