Callalily wrote:Is there a holding period? I read somewhere about a 1 year rule. Does that only apply to stock funds that have capital gains (which means it wouldn't be tax LOSS harvesting)?
The one-year rule distinguishes short-term from long-term gains; if you hold an asset for more than one year, any gains or losses are long-term. Long-term gains are better than short-term gains because they are taxed at a lower rate. Usually, short-term and long-term losses are equally good, but short-term losses are better if you have both long-term and short-term gains in the same year and not enough total losses to offset both of them.
Thus, if you are going to harvest a loss, it is slightly better to harvest before one year; if you are going to harvest a gain, you need to wait until after one year to get any potential benefit (unless you are in the zero tax bracket).