Tax-Loss Harvesting
Turn your bad investments into a tax advantage. How to harvest losses, avoid the wash-sale rule, and rebalance without the tax bill.
“Losing money on a stock feels bad. Using that loss to lower your tax bill feels slightly less bad. That's tax-loss harvesting.”
What you'll learn
Tax-loss harvesting: sell investments that have lost value to realize the capital loss. Losses offset capital gains dollar-for-dollar. Up to $3,000 of net loss can offset ordinary income each year.
Wash-sale rule: you can't claim the loss if you buy a 'substantially identical' security within 30 days before or after the sale. Avoid by buying a different ETF (VTI → ITOT) or waiting 31 days.
Carryforward: unused losses carry forward indefinitely. Track them on Schedule D. Can reduce future capital gains or offset ordinary income at $3k/year.
Pair with rebalancing: sell winners (realize gains), sell losers (harvest losses), the net tax impact is usually minimal. Do this once or twice a year — don't get obsessive.