Tax-loss harvesting is a process that can be done with any type of capital investments at any time of the year.
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• Systematically selling a security that has experienced a loss
• Harvested” losses can offset capital gains and some income
• The sold security is replaced by a similar one, maintaining similar exposure and risk characteristics of a portfolio strategy, like the S&P 500 index
• Due to IRS “wash sale” rules, the sold security cannot be bought back for 30 days
Examples of similar securities
Tax-loss harvesting Process and the Benefits
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Investments that have declined in value are sold.
Realized losses offset gains on income tax returns.
Losses can be carried forward and used to offset future gains.
What is Tax-Loss Harvesting?
Active Tax-Loss Harvesting
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