Harvesting Tax Losses

Money Saving Idea – Harvesting Tax Losses

While we have seen a remarkable recovery in the stock and bond markets over the past year, many investors continue to hold securities that are worth less than they paid for them. A silver lining of these unrealized losses is a taxpayer’s ability to reduce their current year income tax. This is a practical move that can result in thousands of dollars of tax savings. By selling loss positions and recognizing the loss, investors will generate capital losses which can be used to offset current year capital gains from any source.

For example, a gain from the sale of a private business or real estate can be reduced by losses from the stock market. In addition, losses which exceed current year capital gains can be used to offset $3,000 of taxable income in 2009, with any balance carried forward indefinitely and used to reduce income taxes in the future. If you are not one of our financial advisory clients, you will need to make sure to handle this on your own or ask your broker or financial advisor to do this for you. It’s certainly worth taking a look to see if this move could save you money.

If you would like our help in reviewing your personal situation, we would be happy to assist. Just email or call to arrange a time.

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