Taxes5 分で読めます

Loss Carryover and Gain-Loss Netting

I lost 5 million won on stocks this year. In the U.S. you could keep using this loss against taxes into next year and the year after. But in Korea? Surprisingly, you cannot carry it into the next year.

Gain-Loss Netting — In the Same Year, Combine Gains and Losses

"Gain-loss netting" means offsetting transfer gains and transfer losses against each other within the same tax year (January–December).

For example, if you made 10 million won on stock A this year and lost 5 million won on stock B, the tax is levied on the combined net gain of 5 million won. The losing stock effectively reduces the tax on the gaining stock.

However, you must "realize" it to net. Even if you're sitting on a loss, if you don't sell and merely hold (valuation loss), it isn't reflected in the tax calculation. So to reduce tax you must confirm the loss by "actually selling."

Korea's Key Rule — Losses Cannot Be Carried to the Next Year

This is the most important part of this article. Under Korean tax law, stock transfer losses can be offset against gains "only within that year" and are not carried forward as a deduction to the next year.

For example, if you had a net loss of 5 million won this year and there were no gains to offset, that loss simply vanishes from a tax standpoint. Even if a big gain comes next year, you cannot reduce tax with this year's loss.

A point to watch is that this doesn't mean "the loss itself disappears" but that "the chance to use it against taxes disappears." So in a year of large losses, it's important to consider in advance whether to net it against gaining stocks within the same year.

As of July 2026. Tax law may be revised. Gain-loss netting and carryover rules are widely misunderstood, so before actual filing, confirm with National Tax Service materials or a tax professional.

Why Is It Special Compared with the U.S.?

The U.S. rule is close to the opposite. In the U.S., if capital losses exceed capital gains, you can carry the remaining loss forward "indefinitely" to the next year.

Moreover, each year up to $3,000 is also deducted from ordinary income (salary, etc.). The remaining loss keeps rolling forward to be offset whenever gains arise. This is called "capital loss carryover."

By contrast, Korea has no such carryover system. So the U.S.-style strategy of "saving up losses as a future tax-reduction asset" doesn't work in Korea. This difference is a point anyone who runs overseas stocks over a long term must know.

The U.S. $3,000 limit has been unindexed to inflation since 1978, so it remains the same. U.S. tax law can also be revised, and actual application varies by the individual's residence and filing type.

So How Do You Use It?

The one practical lesson from Korea's "no carryover" rule is that tax-standpoint gain-loss tidying must be finished "before the year turns."

In a year with a big gain, realizing a stock you happen to be losing on in the same year to net it can reduce your tax burden. Conversely, in a year full of only losses with no gains to offset, that loss is extinguished for tax purposes, so as regrettable as it is, you should proceed knowing that fact.

However, this is only a "tax principle." Selling a perfectly fine stock to save tax, or rushing to confirm a loss, is a separate matter from investment judgment. This article does not tell you to buy or sell any stock. Its purpose is to understand the rules and look honestly at your returns on an after-tax basis.

よくある質問

Q. I had a big loss this year—can I deduct it from next year's gains?

In Korea, no. Stock transfer losses can be offset only against transfer gains of the same year and are not carried forward to the next year. A loss with no gains to offset vanishes from a tax standpoint. This is the decisive difference from the U.S. (indefinite carryover).

Q. Does having only a valuation loss reduce tax?

No. Only "realized losses" are netted. You must actually sell the losing stock to confirm the loss so it can be offset against the same year's gains. Merely holding is not reflected in the tax calculation.

Q. Are domestic stock losses and overseas stock gains netted too?

There is a rule under which gains and losses on taxable domestic stocks (major shareholder, unlisted, over-the-counter, etc.) can be netted with overseas stocks, but whether they qualify splits by situation. Tax-exempt domestic listed stocks of ordinary individuals are not subject to capital gains tax in the first place, so the netting concept does not apply. Cases are complex, so confirm with a tax professional before filing.