PSA - It's time to Tax Loss Harvest

[The White Coat Investor]

Instead of panicking due to coronavirus (I actually have people cancelling WCICON registrations because they're worried they won't be able to get home due to the novel coronavirus) and crying about your losses, take this opportunity to lower your taxes by tax loss harvesting. Let Uncle Sam share your pain.

You can deduct up to $3K a year of short or long term capital losses against your ordinary income. You can use an unlimited amount of capital losses against capital gains. If you have bought any stocks in a taxable account in the last 4+ months and have not already harvested it, you have a taxable loss right now.

https://www.whitecoatinvestor.com/tax-loss-harvesting/

I picked up $30K in losses this morning. I've even got some shares bought 10 months ago that are underwater or very close to it right now.

[Peds]

well ill raise you $400.....oh wait thats not a humble brag

[Lithium]

TLH was a lot more fun when I started doing it a few years ago. At this point if I keep deducting $3k a year, I'll be in my 60's before I'm above the surface again. Maybe that's when I'll start spending it down anyway.

I read on Bogleheads that the $3k limit has been in place for over 40 years. It would be soooo much more useful if that had been indexed. It would be almost like another standard deduction for me.

[Zzyzx]

also a good time to exchange those bonds or fixed income that's been a drag on your portfolio for equities...

[InfoRPh]

Thought I generally understood TLH. But as I'm re-reading the TLH blog post and the wash sale link, I realized I didn't fully get the wash sale/replacement shares/30-day prior rules. Thanks for the refresher!

Now I realize that as long as I'm selling everything I bought in the previous 30 days when I TLH, those purchases aren't considered replacement shares. So, I can TLH my shares purchased on 1/31/20 :-)

[childay]

Thought I generally understood TLH. But as I'm re-reading the TLH blog post and the wash sale link, I realized I didn't fully get the wash sale/replacement shares/30-day prior rules. Thanks for the refresher!

Now I realize that as long as I'm selling everything I bought in the previous 30 days when I TLH, those purchases aren't considered replacement shares. So, I can TLH my shares purchased on 1/31/20 :-)

Yes. Just don't accidentally buy the same fund within a month. Like I did yesterday, whoops.

[CordMcNally]

well ill raise you $400.....oh wait thats not a humble brag

Everyone with lots of losses just means they're awful market timers and doing it wrong, right? All these rascals buying high...

[Peds]

Everyone with lots of losses just means they're awful market timers and doing it wrong, right? All these rascals buying high...

Something like that

[MaxPower]

Something like that

Well, if you really analyzed the market, and have experience going back decades to help you pick the winners, then you could always buy low and sell high. Or at least you could tell a bunch of people on the internet that without ever having to make concrete predictions in advance or provide any proof...

[zlandar]

So if I bought VTI on 2/4/20 do I have to wait until 3/5/20 to sell any of my VTI for a loss to tax harvest?

[childay]

So if I bought VTI on 2/4/20 do I have to wait until 3/5/20 to sell any of my VTI for a loss to tax harvest?

Assuming you sell all the VTI from 2/4, which I expect is a loss, then you are fine to do it before 3/5. And don't buy any VTI for 30 days after sale

[Lithium]

So if I bought VTI on 2/4/20 do I have to wait until 3/5/20 to sell any of my VTI for a loss to tax harvest?

The key is to sell all VTI purchased in last 30 days. So if you sell tomorrow, anything bought after 1/28/2020 needs to be sold. I'm sure it's all negative anyway.

[Peds]

I should put together a home base for Tax loss harvesting thread...

[Tim]

The key is to sell all VTI purchased in last 30 days. So if you sell tomorrow, anything bought after 1/28/2020 needs to be sold. I'm sure it's all negative anyway.

The 30 days new purchase is from the sale date.
Sell 2/27 don’t buy until 3/29.

[Lithium]

The 30 days new purchase is from the sale date.
Sell 2/27 don’t buy until 3/29.

Replacement shares can be bought 30 days before or after the shares are harvested.