Tax loss harvesting with individual stocks

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Topic Author
settlement12
Posts: 81
Joined: Sun Mar 08, 2020 8:04 pm

Tax loss harvesting with individual stocks

Post by settlement12 »

Lets say I have 4 stocks.

3 do very well and 1 does poorly and makes a loss.

At the end of the financial year, am I better off selling that losing stock, taking the loss to offset my capital gains tax burden, and then rebuying in the new tax year?

Or is it better to let the 4 stocks accumulate for many many years before selling them all at once in 'retirement' or when the money is required? I can't figure out the maths on this
Shallowpockets
Posts: 2533
Joined: Fri Nov 20, 2015 9:26 am

Re: Tax loss harvesting with individual stocks

Post by Shallowpockets »

Your basic math to start is if they would be long term or short term gains. The next would be your tax bracket in the year in which you do this.
That is for the math. The other next thing is what individual,stocks to buy and IF you get 3/4 with a gain, and IF that gain exceeds the loss you want to “harvest”.
The next point is if the total gain verses loss does not exceed the average for the S and P, then you maybe should have just stayed in the index.
TLH - harvesting is a peculiar word to use. A harvest is usually associated with a gain and a positive aspect. TLH is simply using a LOSS. It is still a loss.
TedSwippet
Posts: 5181
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Tax loss harvesting with individual stocks

Post by TedSwippet »

Shallowpockets wrote: Sat Oct 23, 2021 8:10 am Your basic math to start is if they would be long term or short term gains. ...
The topic author posted in the non-US investing forum, and though they didn't specify, it appears that they are a non-US person resident in Ireland. In which case the long/short term and other US tax rules won't apply to them.
settlement12 wrote: Sat Oct 23, 2021 6:28 am At the end of the financial year, am I better off selling that losing stock, taking the loss to offset my capital gains tax burden, and then rebuying in the new tax year?

Or is it better to let the 4 stocks accumulate for many many years before selling them all at once in 'retirement' or when the money is required? I can't figure out the maths on this
It depends entirely on local tax rules.

Assuming Ireland, it looks like selling and then specifically re-buying the same stock at a loss gains you nothing. You get to carry the loss forwards, but by re-buying you have also increased your ultimate capital gain on this stock (assuming it doesn't lose forever!), and this would simply cancel out the loss you took earlier. No gain, but added trading costs. Provided you are happy with the stocks that you hold, the only real time to take any loss is to offset an unavoidable capital gain.

From the document linked above, the first €1,270 of taxable gains in a tax year are apparently exempt from CGT. This argues for annually selling enough of a stock that has a built-in gain to generate enough to use this allowance, since it is an annual use-it-or-lose-it allowance.

All with the disclaimer that I'm not resident in Ireland, so have no practical experience of the above. You'll want to check this all carefully, then.
Topic Author
settlement12
Posts: 81
Joined: Sun Mar 08, 2020 8:04 pm

Re: Tax loss harvesting with individual stocks

Post by settlement12 »

This sounds about right Ted, thanks
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