Daily Tax Loss Harvesting - worth the fees?

[triad]

I'm a TLH newbie so this may be a dumb question.  If I were to TLH on my own I imagine it would only happen once or twice a year - I don't currently TLH at all.  Would it be worth the fee (.25%) to have a roboadvisor do daily TLH for me?  I'm assuming daily TLH would allow me to deduct 3000/yr (which is the max, right?) while doing it bi-annually would probably not be the max every year.  If my marginal tax rate is 33% what is the break even point for daily TLH with a robo vs not doing any TLH?

I figured $1000 in tax savings/.0025=400k

[Lithium]

It isn't very hard at all to TLH 3k in a year.  I've already TLH'd over 25k this year, which is a year that the market is actually up slightly overall.  If you are at all attuned to what is going on in the markets and you have a decent sized taxable account, it shouldn't be that hard to know when your investments have lost money.

Also, you may be saving $1000 in taxes now, but you're eventually going to have to pay a higher capital gains tax than you would have otherwise, had you never TLH'd in the first place.  So you don't really save $1000.  I don't know how to tell you the right way to calculate the break-even balance, except that it's more complicated than you think.  The "how it works" section of the bogleheads wiki may be useful:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

[Zaphod]

Lithium wrote:

It isn’t very hard at all to TLH 3k in a year.  I’ve already TLH’d over 25k this year, which is a year that the market is actually up slightly overall.  If you are at all attuned to what is going on in the markets and you have a decent sized taxable account, it shouldn’t be that hard to know when your investments have lost money.

Also, you may be saving $1000 in taxes now, but you’re eventually going to have to pay a higher capital gains tax than you would have otherwise, had you never TLH’d in the first place.  So you don’t really save $1000.  I don’t know how to tell you the right way to calculate the break-even balance, except that it’s more complicated than you think.  The “how it works” section of the bogleheads wiki may be useful:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Click to expand...

As long as those capital gains taxes are lower than your current marginal/effective rate than you're still doing well. Also its more money allowed to grow, good problem.

[triad]

Lithium wrote:

Also, you may be saving $1000 in taxes now, but you’re eventually going to have to pay a higher capital gains tax than you would have otherwise, had you never TLH’d in the first place.  So you don’t really save $1000.  I don’t know how to tell you the right way to calculate the break-even balance, except that it’s more complicated than you think.  The “how it works” section of the bogleheads wiki may be useful:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Click to expand...

I'm deferring paying at a 33% rate now and will eventually pay at a cap gains rate in the hopefully distant future of 15-20%, right?

[Lithium]

triad wrote:

Lithium wrote:

Also, you may be saving $1000 in taxes now, but you’re eventually going to have to pay a higher capital gains tax than you would have otherwise, had you never TLH’d in the first place.  So you don’t really save $1000.  I don’t know how to tell you the right way to calculate the break-even balance, except that it’s more complicated than you think.  The “how it works” section of the bogleheads wiki may be useful:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Click to expand…

I’m deferring paying at a 33% rate now and will eventually pay at a cap gains rate in the hopefully distant future of 15-20%, right?

Click to expand...

Yep.  Your heirs would get the best deal of all, since any assets you pass on get stepped up in basis when they're transferred.

[PhysicianOnFIRE]

triad wrote:

Lithium wrote:

Also, you may be saving $1000 in taxes now, but you’re eventually going to have to pay a higher capital gains tax than you would have otherwise, had you never TLH’d in the first place.  So you don’t really save $1000.  I don’t know how to tell you the right way to calculate the break-even balance, except that it’s more complicated than you think.  The “how it works” section of the bogleheads wiki may be useful:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Click to expand…

I’m deferring paying at a 33% rate now and will eventually pay at a cap gains rate in the hopefully distant future of 15-20%, right?

Click to expand...

You could pay a 0% capital gains tax in retirement, especially if a decent share of your portfolio is in taxable or Roth accounts.