Tax Harvesting

Hello, newsletter subscribers. I hope your week is going well. A special thank you to Gary, a subscriber in Houston, TX who, after receiving the last newsletter sent an email asking me to explain a year-end strategy he heard called “tax loss selling” or “tax harvesting” in taxable investment accounts. So here is the explanation, and how it may benefit you……

Say, for example, you bought a stock at some point in the past and paid $50/share. For whatever reason, the stock has fallen dramatically and now trades at $35/share, meaning that on paper you have a loss of $15/share. If you have other investments that you have sold at a gain, and would be required to pay tax on that gain, by selling the stock above at $30/share, you get to offset the gain in the other investment by that $15/share loss, thus reducing your tax liability.

In English, here’s another way of saying it……You bought 1,000 shares of a “good” stock that you sold for a $15/share gain, for a total gain of $15,000. In the example above, you bought 1,000 shares of a $50 stock ($50,000) that is you now sell at $35/share ($35,000). The $15,000 loss from that stock offsets the $15,000 gain in the other stock – You have netted out your gain for the year, thus reducing the amount of tax you owe if you had held on to the stock that had fallen.

There are many other strategies, and wrinkles to the above strategy, but that’s one method available in regard to year- end tax planning. If you haven’t done so already, I suggest getting in touch with your financial advisor or accountant to review any possibilities that may exist for your particular situation. As always, you are welcome to contact me to discuss as well and I would be happy to help any way I can.

Thank you again to all of your for your interest and keep the questions coming!

Have a great week,


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