What’s your TLH Strategy [Tax Loss Harvest]

[nasrullah]

Hi all,

The robos push TLH as part of their core value proposition. It sounds nice an all on their blogs, but in practice I just don’t believe the story as much anymore. Don’t get me wrong, I’m very interested to take a paper loss to offset future taxes, but I don’t really understand where it’s worth it and when it’s not. So I’m curious...

What’s your TLH strategy?

Are you evaluating this as set intervals (annually, quarterly, monthly)?

Are you waiting for a specific percentage of the holding, or the portfolio as a whole?

A combination, or something else entirely?

Thanks!

[livesoft]

I look to see if I have losses to TLH on days that are RBDs.

[Quaestner]

I like and share your question. My strategy was that I noticed I had large lot that had a large loss. So I executed a TLH of my Total International fund today. I don't think I'll be able to use up all the losses for maybe 8 years? It's tough to predict future capital gains! Did I harvest "too much"? Should I do more? (I've got some small losses in some lots in other funds. Should I harvest these too?) How does one think about how much of this? The more the merrier? There's got to be some point of diminishing returns, right?

[bling]

i take action when i'm down around $1000.

[happysteward]

Well my strategy is not the best, I do my taxes prior to the end of the tax year and then work hard to reduce the liability...TLH is one method I employ...will read this post with interest...

[PinotGris]

I use TLH to correct mistakes in my taxable account. Like I hold a bunch of stocks which I would like to sell and move the cash into index fund. I need to set off that capital gain with a paper loss.
I do struggle with timing and sadly this period in the market was a no brainer as to when to take the loss - when I saw more red than black in my account it was time.

[The Wizard]

I'm gonna TLH my VTSAX holdings between Wednesday and Friday.
Senate back in session Thursday so could be an up day, depending.
So most likely TLHing Wednesday unless that's a significant up day
This is market timing at it's best...

[zeugmite]

Is it worth "saving" losses when you know you are in a higher tax bracket next year? I suppose if there is a lot of loss to last over many years, there would be little reason to wait, but if it's a smaller amount should it be saved for Jan. 2019?

[Quaestner]

I found this info from Micheal Kitces to be helpful for better understanding Tax Loss Harvesting:
https://www.kitces.com/blog/evaluating- ... rvesting/
After reading it, I'm less excited about it, but still glad I did it.

[ImmigrantSaver]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

[Bacchus01]

My strategy is simple - I TLH whenever I have a loss of any amount

[The Wizard]

My strategy is simple - I TLH whenever I have a loss of any amount

That seems excessive, TLHing three times a week lately...

[alfaspider]

I go back and forth between VTI and VOO when value goes significantly below my tax basis. No hard trigger, but a big drop at year end makes it a no brainer.

[HockeyFan99]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

I just did a second round in December, using VFIAX for US and VTMGX for international.

I’ll be happy to wind up having done this at the bottom, but I am suspicious I’ll have the opportunity to get back to VTSAX / VFIAX in early 2019.

[ImmigrantSaver]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

I just did a second round in December, using VFIAX for US and VTMGX for international.

I’ll be happy to wind up having done this at the bottom, but I am suspicious I’ll have the opportunity to get back to VTSAX / VFIAX in early 2019.

Gotcha. I forgot to mention I can't use VFIAX - have it 401k. Thinking to potentially using Vanguard tax-managed large cap for VTSAX. Are you comfortable with "getting stuck" with VTMGX if we get a January rebound? It's quite different from the other too but I guess one can always add Emerging markets find separately if anything.

Also no clue what to do about VSIAX. Maybe it's time to bite a bullet and start doing etfs..

[ImmigrantSaver]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

I just did a second round in December, using VFIAX for US and VTMGX for international.

I’ll be happy to wind up having done this at the bottom, but I am suspicious I’ll have the opportunity to get back to VTSAX / VFIAX in early 2019.

Gotcha. I forgot to mention I can't use VFIAX - have it 401k. Thinking to potentially using Vanguard tax-managed large cap for VTSAX. Are you comfortable with "getting stuck" with VTMGX if we get a January rebound? It's quite different from the other too but I guess one can always add Emerging markets find separately if anything.

Also no clue what to do about VSIAX. Maybe it's time to bite a bullet and start doing etfs..

[HockeyFan99]

Are you comfortable with "getting stuck" with VTMGX if we get a January rebound? It's quite different from the other too but I guess one can always add Emerging markets find separately if anything.

It’s a good question. Initially I was uncertain, and then I realized that I lacked a principled reason for preferring developed to emerging, or vice versa, within the general bucket of “international.” The primary purpose is to avoid having all equity exposure tied to the US market, but I don’t have (or at least haven’t had) a more nuanced view than that.

And so I’d be interested in what you/others do on this point, and why.

[jdb]

Once a year, last week in December, and only if taxable mutual fund investments down more than 15 percent from cost basis. Otherwise too much portfolio analysis and takes me away from more important things like my winter tomato crop and honeybee hives. Good luck.

[Enganerd]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

[ImmigrantSaver]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

The 31 days haven't passed since my last TLH so I was looking for third alternative partners. Can't do VFIAX unfortunately because holding it in 401k. Alternatively might go into new year with losses and will TLH back mid January when eligible.

[ImmigrantSaver]

Are you comfortable with "getting stuck" with VTMGX if we get a January rebound? It's quite different from the other too but I guess one can always add Emerging markets find separately if anything.

It’s a good question. Initially I was uncertain, and then I realized that I lacked a principled reason for preferring developed to emerging, or vice versa, within the general bucket of “international.” The primary purpose is to avoid having all equity exposure tied to the US market, but I don’t have (or at least haven’t had) a more nuanced view than that.

And so I’d be interested in what you/others do on this point, and why.

I hear your logic and probably wouldn't mind doing the same with the minor portion of my international portfolio. But this TLH will be for my entire International position so I am nervous to exclude emerging markets completely..

[Enganerd]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

The 31 days haven't passed since my last TLH so I was looking for third alternative partners. Can't do VFIAX unfortunately because holding it in 401k. Alternatively might go into new year with losses and will TLH back mid January when eligible.

Right, I understand if you had a 3rd partner you would not mind holding you would go ahead and execute a TLH exchange into that 3rd partner despite the fact it has not been 31 days since your last TLH.

Say you went from from VTSAX to VLCAX 20 days ago can you now exchange VLCAX to VFIAX a 3rd partner even though it’s been less than 31 days since you purchased VLCAX?

[ImmigrantSaver]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

The 31 days haven't passed since my last TLH so I was looking for third alternative partners. Can't do VFIAX unfortunately because holding it in 401k. Alternatively might go into new year with losses and will TLH back mid January when eligible.

Right, I understand if you had a 3rd partner you would not mind holding you would go ahead and execute a TLH exchange into that 3rd partner despite the fact it has not been 31 days since your last TLH.

Say you went from from VTSAX to VLCAX 20 days ago can you now exchange VLCAX to VFIAX a 3rd partner even though it’s been less than 31 days since you purchased VLCAX?

Exactly! Just need a third partner I can live with!

[Enganerd]

I TLHed a bit too soon this time around and so all of my preferred TLH partners are not available till mid January. Should I just wait till then and close the year with losses or should I find the third partners in the meantime? Any recommendations?

So far I have been using VTSAX/VCLAX for US, VTIAX/VFWAX for international and VSIAX/VTMSX for small cap value. Prefer not to use ETFs. TIA

Edit: Oh and Merry Christmas everyone!!

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

The 31 days haven't passed since my last TLH so I was looking for third alternative partners. Can't do VFIAX unfortunately because holding it in 401k. Alternatively might go into new year with losses and will TLH back mid January when eligible.

Right, I understand if you had a 3rd partner you would not mind holding you would go ahead and execute a TLH exchange into that 3rd partner despite the fact it has not been 31 days since your last TLH.

Say you went from from VTSAX to VLCAX 20 days ago can you now exchange VLCAX to VFIAX a 3rd partner even though it’s been less than 31 days since you purchased VLCAX?

Exactly! Just need a third partner I can live with!

That’s good to know. I thought it would violate not buying within 30 days rule. I guess if your selling the entire lot you recently purchased it does not violate the do not buy additional lots during the 30 day window. So why don’t you exchange into VFIAX?

[ImmigrantSaver]

Merry Christmas. I seem to be confused as to what would limit on from making a TLH exchange. I TLH total stock market to sp500 in late October and then from sp500 to large cap index in mid December...I would like to TLH back to my preferred total stock market index, which I can it’s been more than 30 days since I had any trades involving that fund, but because I just moved into large cap say 10 days ago don’t I need to wait until day 31 before I can TLH out of the large cap index?

The 31 days haven't passed since my last TLH so I was looking for third alternative partners. Can't do VFIAX unfortunately because holding it in 401k. Alternatively might go into new year with losses and will TLH back mid January when eligible.

Right, I understand if you had a 3rd partner you would not mind holding you would go ahead and execute a TLH exchange into that 3rd partner despite the fact it has not been 31 days since your last TLH.

Say you went from from VTSAX to VLCAX 20 days ago can you now exchange VLCAX to VFIAX a 3rd partner even though it’s been less than 31 days since you purchased VLCAX?

Exactly! Just need a third partner I can live with!

That’s good to know. I thought it would violate not buying within 30 days rule. I guess if your selling the entire lot you recently purchased it does not violate the do not buy additional lots during the 30 day window. So why don’t you exchange into VFIAX?

Because I buy it in 401k and it might constitute a wash sale

[Stinky]

Will be selling mutual funds that are in a loss position in taxable accounts tomorrow. Will use losses to offset gains that I took earlier this year.

Will reinvest back into the "sold" mutual funds in late January, and will bump up equity allocation in tax-deferred accounts for the next month to compensate for mutual funds sold.

[Bacchus01]

My strategy is simple - I TLH whenever I have a loss of any amount

That seems excessive, TLHing three times a week lately...

Actually, yes. I did it even while on vacation out of the country.

[Gamma Ray]

That’s good to know. I thought it would violate not buying within 30 days rule. I guess if your selling the entire lot you recently purchased it does not violate the do not buy additional lots during the 30 day window. So why don’t you exchange into VFIAX?

Because I buy it in 401k and it might constitute a wash sale

I did a bit of TLH earlier, and went thorough VV/VTI/VOO, and now due to 61 day rule, I guess I can't really go back to any of these. Can I just sell them all and buy VFIAX to avoid wash sale rule?
I don't think I have VFIAX directly in my IRA accounts, I thought I had it in my VFORX and VSMGX but turns out VFIAX is not one of the holidings.

[ImmigrantSaver]

That’s good to know. I thought it would violate not buying within 30 days rule. I guess if your selling the entire lot you recently purchased it does not violate the do not buy additional lots during the 30 day window. So why don’t you exchange into VFIAX?

Because I buy it in 401k and it might constitute a wash sale

I did a bit of TLH earlier, and went thorough VV/VTI/VOO, and now due to 61 day rule, I guess I can't really go back to any of these. Can I just sell them all and buy VFIAX to avoid wash sale rule?
I don't think I have VFIAX directly in my IRA accounts, I thought I had it in my VFORX and VSMGX but turns out VFIAX is not one of the holidings.

VOO and VFIAX follow the same S&P 500 index (VFIAX is just a mutual fund version of VOO), so it will create the wash sale. You need to wait till you can exchange back to VTI or VV

[Gamma Ray]

That’s good to know. I thought it would violate not buying within 30 days rule. I guess if your selling the entire lot you recently purchased it does not violate the do not buy additional lots during the 30 day window. So why don’t you exchange into VFIAX?

Because I buy it in 401k and it might constitute a wash sale

I did a bit of TLH earlier, and went thorough VV/VTI/VOO, and now due to 61 day rule, I guess I can't really go back to any of these. Can I just sell them all and buy VFIAX to avoid wash sale rule?
I don't think I have VFIAX directly in my IRA accounts, I thought I had it in my VFORX and VSMGX but turns out VFIAX is not one of the holidings.

VOO and VFIAX follow the same S&P 500 index (VFIAX is just a mutual fund version of VOO), so it will create the wash sale. You need to wait till you can exchange back to VTI or VV

Sounds like there is no alternative to VTI/VV/VOO.
Am I wrong to think I'll have wash sale, here is my situation, - means sold, + means bought shares.

VOO +1/12, -4/9, +7/20,
VTI +4/9, +7/27, +9/19, -10/18 = Bought VOO on 10/18, Sold VOO on 10/29, Bought VV on 10/29

I guess it's too late to harvest the losses now that market went up and losses are cut in half, but still some loss to harvest.
I assume we are limited to $3k in losses we can claim, right?
Currently, I still have all three in my portfolio, I have unrealized losses on VV and VTI
VOO down very little, was bought in July.

[qwertyjazz]

I look to see if I have losses to TLH on days that are RBDs.

I asked this on another thread. But I saw this. How do you continue to TLH and buy on RBDs without having to own a ridiculous number of funds?
Thank you
QJ

[BigBevo]

My Vanguard advisor gave me a good tip on harvesting and I did it today on my self-managed account. I did an exchange instead of a sell and then buy again the next day. The nice thing about this is it keeps your money in the market as the transaction of the buy and sell take place at the same time.

I exchanged an international fund for another and a domestic for another...both very comparable.

In October when I did it myself I sold and then bought but was out of the market a day waiting for transactions to take place.

And today is another day you don’t want to miss.

[Gamma Ray]

My Vanguard advisor gave me a good tip on harvesting and I did it today on my self-managed account. I did an exchange instead of a sell and then buy again the next day. The nice thing about this is it keeps your money in the market as the transaction of the buy and sell take place at the same time.

I exchanged an international fund for another and a domestic for another...both very comparable.

In October when I did it myself I sold and then bought but was out of the market a day waiting for transactions to take place.

And today is another day you don’t want to miss.

You cannot exchange ETFs.

[livesoft]

I look to see if I have losses to TLH on days that are RBDs.

I asked this on another thread. But I saw this. How do you continue to TLH and buy on RBDs without having to own a ridiculous number of funds?
Thank you
QJ

RBDs are few and far between. Plus since one has tax-loss harvested at a previous super-low, it is unlikely that one needs to TLH on an RBD. As I recently posted, I have not TLH'd since 2016.

So don't forget that after 31 days, you don't keep adding a new different fund --- you use a fund you are already familiar with.

[livesoft]

You cannot exchange ETFs.

So what? You can sell then buy without waiting at all. Maybe it takes you 1.241 seconds to effectively do an exchange with two separate transactions. Certainly, no waiting to the next day to buy. This "wait" thing is a common myth about ETFs and I don't know why.

[BigBevo]

My Vanguard advisor gave me a good tip on harvesting and I did it today on my self-managed account. I did an exchange instead of a sell and then buy again the next day. The nice thing about this is it keeps your money in the market as the transaction of the buy and sell take place at the same time.

I exchanged an international fund for another and a domestic for another...both very comparable.

In October when I did it myself I sold and then bought but was out of the market a day waiting for transactions to take place.

And today is another day you don’t want to miss.

You cannot exchange ETFs.

Maybe Vanguard let’s you exchange their funds? My transaction is processing and has been confirmed by more than one person at Vanguard. The exchange could have been done by me as the option was on the screen but I called and had someone on their end do it to make sure all was good (I don’t trade or harvest myself often). The transaction states “exchange.” One example is VFIAX for VTSAX.

[BigBevo]

You cannot exchange ETFs.

So what? You can sell then buy without waiting at all. Maybe it takes you 1.241 seconds to effectively do an exchange with two separate transactions. Certainly, no waiting to the next day to buy. This "wait" thing is a common myth about ETFs and I don't know why.

The funds I’m in which seem common do not process until close of business day each day. I guess technically I can do what you suggest but the funds for the buy would need to come from somewhere else as the funds from the sell won’t settle until end of day/next morning.

[TierArtz]

I'm new to TLH. I'm more willing to have a portion of my portfolio in cash (even after 26 Dec) than I am to return to a complicated portfolio with similar partners for every fund. I'll either exchange the value of shares with short term losses for an asset class that needs fed or move that small fraction of the total to cash, wait 30 days, then see what asset class needs fed/repurchase. Presently I'm using total stock (VTSAX), total international stock (VTIAX), intermediate term tax exempt (VWIUX) and tax managed small cap (VTMSX). It may not be a perfect plan, but it will work.

[anjou]

You cannot exchange ETFs.

So what? You can sell then buy without waiting at all. Maybe it takes you 1.241 seconds to effectively do an exchange with two separate transactions. Certainly, no waiting to the next day to buy. This "wait" thing is a common myth about ETFs and I don't know why.

The funds I’m in which seem common do not process until close of business day each day. I guess technically I can do what you suggest but the funds for the buy would need to come from somewhere else as the funds from the sell won’t settle until end of day/next morning.

It is possible to buy with unsettled funds. So, if you make a sale of an ETF, the unsettled funds are a pending credit to your settlement fund. You can issue an immediate buy transaction. What you cannot do is sell the newly purchased fund and get the proceeds right away; you have to wait for the settlement period or a bit longer (if my memory serves me correctly).

One caveat with exchanging from ETFs to mutual funds. Since ETFs execute at the intra-day price, and mutual funds execute at the closing price, it is best to perform the TLH or exchange from ETF to mutual fund near the end of the trading day. On a day like today, I was the chump, and hope people do not make my mistake.

Thanks.
Anjou.

[Gamma Ray]

anjou, you are correct. VG helps avoid free riding violation, which was explained to me by mr/ms Livesoft in another thread as well, you cannot use the funds until after T+2. (Transaction+2 days) meaning you can buy with unsettled funds but you cannot sell it again until after T+2, so this is the time where exchange comes in handy with mutual funds.

How likely is it that you will need to make so many moves within few days? Unlikely, but for those who love to fiddle with their portfolio, I guess it works for them.

I only touch it when there is more than $1k in loss that I can harvest, but at this point I am not so clear since I made so many moves recently.

[lukestuckenhymer]

Exchanged VTIAX for VFWAX in November, harvesting a $6,000 short term loss. I'm good for the next 2 years...

[Slapshot]

For some perspective, I did TLH back in the great dip of 2008-2009. As a result, I can't do any TLH now in my funds because all are still way up from their re-entry points back then. I did some TLH with some individual stocks yesterday.

[Gamma Ray]

For some perspective, I did TLH back in the great dip of 2008-2009. As a result, I can't do any TLH now in my funds because all are still way up from their re-entry points back then. I did some TLH with some individual stocks yesterday.

Haven't you been buying anything since then? You know you can TLH if you do spec-ID transaction not FIFO.