Tax-loss harvesting means selling an investment that has fallen below what you paid, capturing the loss for tax purposes, and immediately reinvesting in a similar — but not 'substantially identical' — holding so you stay invested. Realised losses can offset capital gains and up to $3,000 of ordinary income per year, with the rest carried forward. We do this inside taxable managed accounts where it applies. It is not magic, and it is not for every account.
Who this is for
Clients with taxable brokerage accounts under our discretionary management — especially those who also have realised gains elsewhere, sold a property or a business, or receive equity compensation. It is a technique inside the management relationship, not a standalone product you buy separately.
What happens, step by step
- Monitor. Positions in taxable accounts are watched for meaningful unrealised losses — routinely, not just each December.
- Harvest. When a loss is large enough to matter after trading costs, we sell the position and book the loss.
- Stay invested. Proceeds go immediately into a similar holding, so a market rebound isn't missed while the loss is captured.
- Respect the wash-sale rule. Buying a substantially identical security within 30 days before or after the sale disallows the loss — we track this across the accounts we manage. Accounts we don't see (a spouse's 401(k), an outside brokerage) can trip the rule, which is one reason we ask about them.
- Report. Realised losses appear on the custodian's 1099 for your CPA; unused losses carry forward to future years.
The honest limits
Harvesting mostly defers tax rather than erasing it — selling at a loss lowers your cost basis, which can mean more gain later. That deferral is usually, not always, favourable. It does nothing inside IRAs and 401(k)s, where gains and losses have no annual tax effect. And its value depends on your bracket and your gains: a retiree in the 0% capital-gains bracket may get little from it. Anyone marketing harvesting as free money is rounding up.
What it costs
Nothing additional — harvesting is included in discretionary management where it applies. Our investment-management fee is up to 2.00% of the assets we manage per year, subject to negotiation, generally billed quarterly in arrears and disclosed in writing before we begin. The firm may waive all or part of its fee. Brokerage, transaction, fund and ETF expenses may apply separately. The complete published schedule →
What this does not include
- Tax advice or preparation. We coordinate with your CPA; the tax return and the tax strategy for your whole situation are theirs.
- Guaranteed savings. The benefit depends on markets, your bracket, and your gains — none of which are promised.
- Retirement accounts. No harvesting in IRAs or 401(k)s, because there is nothing to harvest.
Common questions
Is tax-loss harvesting an extra charge?
No — it is included in discretionary management where it applies.
When does harvesting help, and when doesn't it?
It helps when you have realised gains, or ordinary income up to the $3,000 annual offset, to set the loss against. It does little in a low bracket, nothing in a retirement account, and it can backfire if the wash-sale rule is tripped.
Do you guarantee a tax saving?
No. The benefit depends on markets, your bracket and your gains — none of which are promised. Your CPA owns the return; we coordinate.
Have a taxable account and some gains?
That's the combination where this earns its keep. Fifteen minutes, free, either language.