Unrealized Loss

Unrealized losses are paper losses that happen when an investor hangs onto an asset whose value has dropped without selling it and recognizing the loss. In the event that an asset's price does eventually rise, an investor can choose to postpone realizing a loss in the hopes of at least breaking even or making a little profit. For tax purposes, a loss must be realized before it may be used to offset capital gains. Unrealized gains and losses can be compared to realized gains and losses.