A Silver Lining – Tax Loss Harvesting

A Money Saving Idea – Harvesting Tax Losses

A silver lining to the recent losses in the stock markets is investors’ ability to use losses in their investment portfolio 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, 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 2008, 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 financial advisor to do this for you.

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