Personal Finance

if you lose money in tfsa via stock market can you refill your losses?

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  • Aug 30th, 2021 10:50 pm
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Deal Addict
Aug 18, 2003
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if you lose money in tfsa via stock market can you refill your losses?

if you lose money in tfsa via stock market can you refill your losses? I know you cannot claim losses but can you refill to max out. thx
Patience comes to those who wait
12 replies
Deal Addict
Oct 24, 2010
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Ottawa
What do you mean?

TFSA contribution room is tracked based on contributions and withdrawals. You lose room when you contribute. You gain room January 1 after a withdrawal, equal to the amount you withdrew in the previous calendar year; or January 1, when you receive an annual addition of new contribution room.

If you had $5k in room and contributed $5k into a TFSA, you have $0 in contribution room left.

If you invested the $5k in the stock market, you lost $2k, and and the value of your TFSA is now $3k, you still cannot contribute any more if your available contribution room is $0. You can't now go and contribute another $2k because your TFSA lost $2k.

If you withdraw that $3k now, you'll get $3k in room back on January 1. You'll have realized the $2k loss in contribution room. You won't get that $2k back.

The only wait to get back to $5k is to grow that $3k back up to $5k within the TFSA before withdrawing.
Last edited by Dynatos on Aug 30th, 2021 1:16 pm, edited 1 time in total.
Deal Addict
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Nov 15, 2013
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Toronto, ON
Charles wrote: if you lose money in tfsa via stock market can you refill your losses? I know you cannot claim losses but can you refill to max out. thx
If you started with 5k, and you lost 5k from trading, that 5k contribution room is lost forever.
Deal Addict
Oct 24, 2010
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Ottawa
Wrestlemania wrote: If you started with 5k, and you lost 5k from trading, that 5k contribution room is lost forever.
Only if it puts the value to $0, or you realize the loss by withdrawing it. Technicality, I know.
Deal Fanatic
Jan 19, 2017
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Charles wrote: if you lose money in tfsa via stock market can you refill your losses? I know you cannot claim losses but can you refill to max out. thx
If it is allowed, then it should work the other way too(i.e. CRA will force you to remove all profit from TFSA and back to your contribution amt).
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Feb 3, 2005
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Easy answer - no.

The TFSA being tax sheltered is great for gains - but a TFSA is a negative if you have losses because they can't be used to offset future gains for tax purposes (non sheltered investing capital gains).

For this reason, you don't want to "gamble" with the TFSA - stick to market index funds, big cap stocks, etc. that you are going to hold and enjoy gains over time make sense. Or limit the high risk to a smaller portion.

But, ultimately you make the choice. If you go high risk and it goes your way, you get big gains - tax free.
Deal Addict
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Nov 15, 2013
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Tiberius wrote: Easy answer - no.

The TFSA being tax sheltered is great for gains - but a TFSA is a negative if you have losses because they can't be used to offset future gains for tax purposes (non sheltered investing capital gains).

For this reason, you don't want to "gamble" with the TFSA - stick to market index funds, big cap stocks, etc. that you are going to hold and enjoy gains over time make sense. Or limit the high risk to a smaller portion.

But, ultimately you make the choice. If you go high risk and it goes your way, you get big gains - tax free.
Gains too big? CRA will come knocking.
Deal Guru
Dec 5, 2006
13028 posts
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Markham
Just confirm: you only lose the room if you withdraw and try to put money back, right?

Eg if one has 5000 and lost 4000, he withdrew rest 1000. So he can only put 1000 back instead of 5000. But if he deposit 5000 and lost 4000 in the account without withdraw,He just lose money on paper but he doesn't lose the room(eg he still has 5000 room technically).

Is this correct?

Thanks
Deal Addict
Oct 24, 2010
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Ottawa
smartie wrote: Just confirm: you only lose the room if you withdraw and try to put money back, right?

Eg if one has 5000 and lost 4000, he withdrew rest 1000. So he can only put 1000 back instead of 5000. But if he deposit 5000 and lost 4000 in the account without withdraw,He just lose money on paper but he doesn't lose the room(eg he still has 5000 room technically).

Is this correct?

Thanks
No it's not technically incorrect.

If you put $5k into the TFSA, you lose that $5k contribution room. Full stop. Whether your investment grows or shrinks does not change that fact.

When you withdraw money from the TFSA, you can gain contribution room (on January 1 of the following year) based on how much you withdraw. If you withdraw $1k, that means you'll only get $1k in contribution room come January 1. But you lost that other $4k the moment you contributed that initial $5k to the account. It had nothing to do with the gains or losses or how much you withdrew.

And yes, I understand what you're saying and how you're seeing it. But as long as you have $1 in the TFSA or in available contribution room, it is possible (but perhaps to probably) for your TFSA to grow to a point that you can again withdraw $5k and thus "gain back" that $5k in room.

In short, contribution room changes based on contributions and withdrawals. Gains or losses technically have nothing to do with it.
Deal Fanatic
Jan 21, 2014
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Wrestlemania wrote: Gains too big? CRA will come knocking.
It depends. If someone were to buy TSLA from the beginning and never sell. They have millions by now and no, CRA can't do anything about that
Deal Addict
Jan 31, 2007
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Richmond Hill
No, otherwise if your investment growth, does it reduce your room?

How it works is just count contribution and withdraw (in and out).
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Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
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Jr. Member
Jul 29, 2013
174 posts
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Calgary
I did a withdraw from my TFSA for a property purchase. The answer is if you withdraw with gains CRA will credit you back the room for contributions including the space that's part of the gains.

Ie: you deposited 50k. You gained 50k. 100k total. You withdrew 100k. Jan 1 of the next year you get 100k in contribution space.

Hope this helps
Deal Addict
Jan 31, 2007
4797 posts
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Richmond Hill
NickL645 wrote: I did a withdraw from my TFSA for a property purchase. The answer is if you withdraw with gains CRA will credit you back the room for contributions including the space that's part of the gains.

Ie: you deposited 50k. You gained 50k. 100k total. You withdrew 100k. Jan 1 of the next year you get 100k in contribution space.

Hope this helps
Correct, which again: Is all about amount of money In and Out, not money holding inside
******************************************************
Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
******************************************************

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