Definition

Tax-loss harvesting means realizing a loss on an investment to cancel out capital gains — and up to a limited amount of ordinary income — reducing your tax bill. You then reinvest in a similar but not "substantially identical" holding to stay in the market. The wash-sale rule prevents claiming the loss if you rebuy the same security within 30 days.

1. Tax-Loss Harvesting: How to Turn Investment Losses into Tax Savings

   Tax-loss harvesting lets you offset investment gains with losses — reducing your tax bill without significantly changing your investment exposure. Here is how to do it correctly.
   tax

1. Wash Sale Rule

   An IRS rule disallowing a loss if you rebuy the same security within 30 days.
2. Capital Gains Tax

   Tax on the profit when you sell an investment for more than you paid.
3. Brokerage Account

   A taxable account for buying and selling investments like stocks and funds.