Tax Loss Harvesting

Category: tax

The practice of selling securities at a loss to offset a capital gains tax liability.

If you sell a stock for a $5k gain, you owe tax. If you sell another stock for a $5k loss, you "harvest" that loss to net it against the gain, potentially paying $0 in tax. It is the core mechanism used by robo-advisors to create "tax alpha."

Common Examples

• In December, we performed extensive tax loss harvesting to offset the significant capital gains we realized from the real estate sale.
• Tax loss harvesting is a powerful tool to shield your investment portfolio from unnecessary taxes, provided you avoid the IRS wash-sale rule.