In short
Tax-loss harvesting means selling investments at a loss to offset capital gains, and up to $3,000 a year of ordinary income, while staying invested in similar assets.
Key takeaways
- The wash sale rule disallows the loss if substantially identical securities are bought within 30 days before or after the sale.
- Unused net capital losses carry forward indefinitely for individuals.
- It is most valuable against short-term gains, which are taxed at ordinary rates.
Where it's tested
TCP: Individual Tax Planning Strategies — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Tax-loss harvesting involves selling depreciated securities to realize losses. The primary constraint on this strategy is: