A capital loss is a loss incurred by the owner of a fixed asset from its sale or disposition. The amount of the loss is the difference between the asset's purchase price by the owner and its sale price. For example, a person could buy a building for $500,000 and later sell it for $475,000, creating a capital loss of $25,000. A taxpayer can offset capital losses against capital gains, thereby reducing the amount of tax payable. If there is an excess of capital losses over capital gains, the losses can be carried forward to later periods to match against any capital gains that may arise.