Legal Definitions - unrealized loss

An unrealized loss is a loss that has not yet been realized or actualized. It is also known as a paper loss. This means that the value of an asset has decreased, but the asset has not been sold or disposed of yet.

For example, if you bought a stock for $100 and its current market value is $80, you have an unrealized loss of $20. This loss is not realized until you sell the stock for less than what you paid for it.

Another example is when a homeowner's property value decreases due to a decline in the housing market. The homeowner has an unrealized loss until they sell their property for less than what they paid for it.

Unrealized losses are important to keep track of because they can affect your overall financial position. It is important to monitor your investments and assets to make informed decisions about when to sell or hold onto them.