Author Topic: Tax Loss Harvesting - limits?  (Read 1637 times)

jeromedawg

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Tax Loss Harvesting - limits?
« on: June 28, 2016, 09:51:17 AM »
Hey guys,

I seem to recall there being a $3000 limit on declaring losses per tax year, but that you can carry them over year over year. That said, is it advisable to always be looking for TLH opportunities even if that limit has been reached or exceeded?

dividendman

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Re: Tax Loss Harvesting - limits?
« Reply #1 on: June 28, 2016, 09:54:29 AM »
There is no limit. I believe you can claim 3k of losses against regular income. You can claim an unlimited amount of capital losses against capital gains (assuming you have enough losses/gains).

I believe capital losses can be carried forward indefinitely to be used against future capital gains.

jeromedawg

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Re: Tax Loss Harvesting - limits?
« Reply #2 on: June 28, 2016, 10:05:13 AM »
I'm considering TLHing a couple funds that are in the negative now. I know they say not to time the market when it comes to trying to wait  for a stock/fund to get as "low" as possible before buying. Would the same rule apply to TLHing funds? Or is there generally more strategy applied in this case? e.g. if a stock/fund is on a downward trend and is -10 today and dropping, is it prudent to just go ahead and TLH, or is it a good idea to wait a bit and see if it will drop even more before deciding to TLH? Problem is if I sell the current fund and buy another, the other fund has a 90 day short term redemption fee, so I want to make absolutely sure this is the right move to make now vs later.

tonysemail

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Re: Tax Loss Harvesting - limits?
« Reply #3 on: June 28, 2016, 03:33:53 PM »
If you discover that you want to TLH twice in a 60-day window, that means you need to identify a 3rd ETF to trade into to avoid wash sale rules.
It's diminishing returns for me.
So I agree that sometimes it's better to take a wait and see approach before pulling the trigger.


seattlecyclone

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Re: Tax Loss Harvesting - limits?
« Reply #4 on: June 28, 2016, 03:52:51 PM »
I always tend to operate on the assumption that the market will go up tomorrow. If I have some money to invest today, I'll do it. By the same token, if I can harvest some significant losses today, I'll do it. I don't think there's much of a reason not to harvest the losses, even if you do have a sizable sum to carry over. Every little bit just helps the amount of time until you have to report gain income during retirement.

catccc

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Re: Tax Loss Harvesting - limits?
« Reply #5 on: June 29, 2016, 02:25:42 PM »
Right, to echo a PP, the limit is against ordinary income.  If you are in the 15% tax bracket like me, you'll want to time TLH in a year when you have little to no capital gains.  (Because you aren't gaining anything using losses to offset gains when they are taxed at 0%...)