Author Topic: Locked in LTCG in taxable but now don't have many losses to offset them  (Read 1052 times)

Mako52

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I decided to lock in some long-term gains over the summer in a taxable account but didn't sell some losers to offset them.  Now, with the current market, even the losers don't have much of an unrealized loss. 

In this situation, should you just be happy with the "win" instead of making sure you're always tax loss harvesting? 

terran

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #1 on: November 07, 2019, 09:18:10 AM »
Tax gain harvesting (what you did) and tax loss harvesting shouldn't really be mixed anyway. You probably shouldn't have sold at a gain unless you're currently in the 0% long term capital gains bracket, in which case it's better that you didn't harvest losses as that would just offset gains you won't pay tax on anyway.

trollwithamustache

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #2 on: November 07, 2019, 09:26:18 AM »
sooo… if you always offset your winners with loosers you reset. then you've never made any real cashflow...  Yes now that you are finally making real money in the market you need to pay taxes!

oldmannickels

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #3 on: November 07, 2019, 11:44:23 AM »
How much gain?
When did you realize the LTCG?
Are you Accredited?

Fundrise offers an opportunity zone fund. You could invest your gains there and defer for a number of years. Of course it might not be what you want to invest in, but if you can I think the idea is worth taking a look at.

MDM

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #4 on: November 07, 2019, 12:27:48 PM »
In this situation, should you just be happy with the "win" instead of making sure you're always tax loss harvesting?
Yes.

bwall

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #5 on: November 09, 2019, 05:22:32 AM »
In this situation, should you just be happy with the "win" instead of making sure you're always tax loss harvesting?
Yes.

+1.

These are high quality problems to have.

I'd much rather have my losers turn into winners instead of selling at a loss. Meaning: It's better to have $1 of profit and pay 20 cents to the taxman, than to have $1 of loss and 'save' 20 cents because no taxes are paid.

Alternative strategy: If long term capital gain taxes are too high, then maybe don't invest anything at all. Problem solved!

frugalnacho

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #6 on: November 22, 2019, 08:24:56 AM »
I don't understand the point of locking in LTCG, while also locking in losses.  What is the net benefit? You've merely shifted future tax obligations from one asset to another for no benefit.

I thought you typically would lock in LTCG when it was advantageous for you, like when you are in the 0% LTCG tax bracket.  Thus you've reset your basis and paid no taxes.

And you typically lock in losses when it's advantageous for you, like when you're in a high tax bracket and you can lower your taxable income by locking in the loss (and presumably pay less in future taxes).

But doing both simultaneously seems to bring no benefit.  Am I missing something?

LetItGrow

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #7 on: November 22, 2019, 06:07:11 PM »
I don't understand the point of locking in LTCG, while also locking in losses.  What is the net benefit? You've merely shifted future tax obligations from one asset to another for no benefit.

I thought you typically would lock in LTCG when it was advantageous for you, like when you are in the 0% LTCG tax bracket.  Thus you've reset your basis and paid no taxes.

And you typically lock in losses when it's advantageous for you, like when you're in a high tax bracket and you can lower your taxable income by locking in the loss (and presumably pay less in future taxes).

But doing both simultaneously seems to bring no benefit.  Am I missing something?

I think you missed that the OP did not sell any losers.

However, I think you are correct, so OP, in the future refer to FN's post.

frugalnacho

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #8 on: November 23, 2019, 10:54:56 AM »
I don't understand the point of locking in LTCG, while also locking in losses.  What is the net benefit? You've merely shifted future tax obligations from one asset to another for no benefit.

I thought you typically would lock in LTCG when it was advantageous for you, like when you are in the 0% LTCG tax bracket.  Thus you've reset your basis and paid no taxes.

And you typically lock in losses when it's advantageous for you, like when you're in a high tax bracket and you can lower your taxable income by locking in the loss (and presumably pay less in future taxes).

But doing both simultaneously seems to bring no benefit.  Am I missing something?

I think you missed that the OP did not sell any losers.

However, I think you are correct, so OP, in the future refer to FN's post.

I didn't miss it, the OP seemed to be lamenting that he didn't lock in losers in addition to his gainers.  Which makes no sense to me, you either do one or the other depending on your situation, but doing both simultaneously seems to provide no benefit. 

MustacheAndaHalf

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Re: Locked in LTCG in taxable but now don't have many losses to offset them
« Reply #9 on: November 24, 2019, 04:32:50 AM »
Most people owe 15% of the LTCG.  If you sold $5,100 of assets at a $100 gain, you would owe $15.  So the actual tax impact may be much smaller than you expect.

It's also worth noting that tax loss harvesting only works as a short-term strategy.  Stocks tend to double faster than you'd expect (at 7%, it takes ~10 years).  Once they've doubled, how often will you see a -50% loss?  -75%?  It's very rare.  Most equities make gains over time, so the longer the time frame, the less likely tax loss harvesting becomes.