Reaping capital loss strategy

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
jkyle
Posts: 11
Joined: Thu Mar 19, 2015 1:39 pm

Reaping capital loss strategy

Post by jkyle » Mon Dec 02, 2019 10:17 am

What’s a good strategy for reaping short term capital losses?

I’m sitting on a decent pile. Would it be best to let them roll over? Or sell other assets to realize the short term gains, then buy back? As I understand, this wouldn’t be a wash sale since wash sales only applies to losses?

lakpr
Posts: 3064
Joined: Fri Mar 18, 2011 9:59 am

Re: Reaping capital loss strategy

Post by lakpr » Mon Dec 02, 2019 10:23 am

jkyle wrote:
Mon Dec 02, 2019 10:17 am
What’s a good strategy for reaping short term capital losses?

I’m sitting on a decent pile. Would it be best to let them roll over? Or sell other assets to realize the short term gains, then buy back? As I understand, this wouldn’t be a wash sale since they only applies to losses?
The best use of capital losses is to roll them over and apply against your ordinary income for $3000 per year. However, if you are "sitting on a decent pile" as you put it and you don't foresee exhausting them all within a decent time period (say 7 or 8 years, so max $25k), then apply those losses against short term capital gains. Yes, if you are selling them against gains, wash sales rules don't apply.

Topic Author
jkyle
Posts: 11
Joined: Thu Mar 19, 2015 1:39 pm

Re: Reaping capital loss strategy

Post by jkyle » Mon Dec 02, 2019 12:09 pm

I think I’m roughly looking at 50+ years of I only took the 3k deduction.

livesoft
Posts: 68579
Joined: Thu Mar 01, 2007 8:00 pm

Re: Reaping capital loss strategy

Post by livesoft » Mon Dec 02, 2019 12:12 pm

Only 50+ years? Since 2009, I've used carryover losses to never pay any capital gains taxes well into retirement. Unless you are in your late 70s and older, I would not be in any hurry to use up these losses since you will use them up naturally as you sell assets in order to pay for your living expenses in retirement.

I think the only reason to realize short-term gains is because you need to rebalance in taxable and/or you need cash to pay for your expenses.
Wiki This signature message sponsored by sscritic: Learn to fish.

lakpr
Posts: 3064
Joined: Fri Mar 18, 2011 9:59 am

Re: Reaping capital loss strategy

Post by lakpr » Mon Dec 02, 2019 12:18 pm

jkyle wrote:
Mon Dec 02, 2019 12:09 pm
I think I’m roughly looking at 50+ years of I only took the 3k deduction.
Given livesoft's subsequent reply --- you might want to read his classic thread "How to earn six figures in retirement and pay zero taxes ... " :)

Post Reply