Tax loss harvesting question- I have a few underperforming investments (stocks and ETFs) that I’m looking to offload at a loss. If I sell them I would be incurring a loss of around 3-5k. Contd.

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You can reduce your regular income by up to $3k of loss. So you’d be taxed on $497k instead. Excess loss over $3k can be carried forward to future years.

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Do any of your funds have cap gain distributions? Even if you didn’t sell, you can still have capital gains.

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Oh, that’s a good point P1. I’ll check

I didn’t sell anything else during the year so no capital gains. However we fall into a very high income tax bracket this year - HHI 500k. Can I use this 3k loss to offset my income tax? Are there any considerations for this? Eg. I will not buy the same stock again in 30 days

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You can not repurchase the assets for 30 days or it’s a whitewash sale and you can’t take the loss. Technically you can’t purchase like assets (ie two ETFs that track same index are technically a whitewash), but I’ve never had an issue here.

The limit for individuals is 1.5k. The 3K is only if you’re married and filing jointly.
You can carry additional forward for an unlimited amount of time. I rebalanced in height of Covid last year and will have a carry forward for 10 years.

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There are no income limits on the $3k cap loss deduction.

Thank you P1 and ASM1

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