I have a capital loss carryover from real estate, system is applying entire amount to long-term capital gains. How do I limit to 3,000 regular and carryover the rest?

[Marti-R]

With tax rate on long-term capital gains lower than on my regular income, I would expect to pay less tax in the long run if I continue to apply $3,000 yearly over several years instead of using the entire loss this year.

[AnnetteB6]

It is not possible to limit the amount that is applied to only $3000 and carryover the rest.  If the gains are on your return to support applying the carryover losses, then the entire amount will be applied in the current year.  

Take a look at the following TurboTax article for more details:  What is a capital loss carryover?

[Marti-R]

Thanks, that's helpful.  I'd rather use none at all this year than use all of it on long-term gains, but I can't find any way to remove it from my return entirely either.  The post you linked to states, "Carryovers from this year's return must be applied to next year's return." can you advise where in IRS regulations this comes from?  All text I have seen so far in my research says "can" use, I cannot find any IRS regulation that says "must" use.  Thanks again!

[AnnetteB6 · Accepted solution]

I have looked for a specific resource that states that carryover losses must be used if there is enough capital gains reported on the return.  I did not find an IRS instruction that uses that type of wording.  Instead, you have to consider the tax forms themselves and how future carryover losses are calculated.  

There is no provision in the tax forms or their instructions that would allow you to not apply the carryover loss to any capital gain being reported for the current year.  If skipping the carryover loss was allowed, the tax form (Schedule D) would have that provision.  Instead, the carryover loss is reported on Schedule D and combined with current year gains.  Any remaining loss is carried forward to future years.  

@Marti-R