Thanks for the reply. Very clear explanation and it helps a lot.My accountant always says - unless there is a reason otherwise - take your tax deductions NOW and pay taxes as late as necessary. You are describing tax gain harvest.Sorry I may have confused my self as well.
Real world example, and this may be purely for my own curiosity as I do think cap gains carryover probably makes more sense; trying to lower my taxable income as much as possible within the 27% marginal tax rate I will be in (that I now know from yourself and others who had helped in a previous thread of mine).
The example:
Purchased 44 shares of ITOT on 6/27 for $133.77 for a total investment of $5885.88.
As of 30 seconds ago ITOT is selling for $139.30.
I sell the 6/27 lot and then buy $5885.88 ITOT right now (or 30 seconds ago) resulting in 42 shares bought.
Same amount invested but if it grows my capital gains would be less going forward then it would have been if I kept the 6/27 lot.
Again, this is assuming I have losses to cover the sale of the 6/27 lot and will not incurring additional cap gains tax it.
Is there any benefit whatsoever doing something like this?
So there's tax loss harvest and tax gain harvest.
Tax loss harvest is - I think you did this - the market crashes, you sell shares at a loss and then immediately buy a similar but materially different stock (eg SP 500 vs TSM). You sold at a loss so you have an immediate deduction, but your cost basis is now lower which means when you take capital gains you will probably pay those taxes back later. But if you donate the shares or gift them or whatever so that you don't pay gains - you got the write off but you never pay taxes.
Tax gain harvest is obviously the opposite. The market goes up and you sell generating a bunch of capital gains and you pay taxes now. Why would you do this? You try to defer taxes in general. You would do this if for example you were unemployed for a period of time or are on sabbatical or what have you, your income is low, and you have a brief time where you will pay less in taxes realizing them now. So you pay low cap gains now, repurchase the shares at a higher rate, so when you are in a higher income bracket you have a higher cost basis.
I think this might work if you gifted shares to a kid so they can cash out at college age when they have no income.
That's my understanding at least.
Yes, I TLH'ed already when there was the "big" drop earlier in the year.
It is my understanding that my current marginal rate 2025 is 27%, which apparently not very low. This is due to cashing out and reinvesting long-term gains back in February. I decided to started to manage my own investments and switched to a simpler portfolio for long term investments.
Currently investing nearly my entire earned income into my 401k while attempting to live frugally on cash savings I currently (Left over from my switch to self-managed).
Statistics: Posted by EasyC — Sat Aug 23, 2025 8:31 am — Replies 15 — Views 1168