In this letter, an analysis on CDMA forward link capacity with hard and soft handoffs, when a handoff decision is based on filtered pilot signal strengths, is provided. For the soft handoff, capacity based on three different power allocation schemes is investigated: equal power, equal signal to interference ratio and selection diversity. Contrary to previous results that soft handoff provides a capacity decrease in the CDMA forward link, it is concluded that soft handoff mitigates capacity loss due to filtering through diversity gain, and may in fact provide higher capacity.