Quote:
Originally Posted by The Dad Fisherman
Makes Sense
I never claimed to be a finance guy
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If you pay $100 for a share of stock, and the next day it's worth $80, you have an unrealized capital loss of $20, but that loss is in theory only. The decrease effects your net worth, but has zero impact on your taxes until you sell the stock.
You pay taxes on realized capital gains, which is the difference between the price on the day you sell, and the price on the day you bought.
If you own commercial real estate, you pay taxes on your income, which in a simplified sense, is the revenue from rents collected, minus expenses like the mortgage, maintenance etc, Net income can be negative, in which case you owe no taxes.