Simple English definitions for legal terms
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A paper loss is when something you own, like a house or a stock, decreases in value and you lose money on it. It's called a paper loss because you haven't actually sold the thing yet, so you haven't really lost any money. But if you do sell it for less than you bought it for, then the paper loss becomes a real loss.
Definition: A decrease in value of an asset that is only on paper and has not been realized through a sale or disposition.
These examples illustrate how a paper loss is a decrease in value that has not yet been realized through a sale or disposition. The value of the asset has decreased, but the owner has not yet experienced an actual loss of money.