Tax loss harvesting

I've already done it twice and will do it again in October when I can flip my bonds back to the fund I flipped them out of at the end of August. I TLH whenever I have unrealized losses in my taxable account.
 
No, and no, to directly answer your questions, because I don't have any losses to take in taxable. I've seen a lot of threads so I'm sure some have or will do it.

I don't worry too much about timing tax losses. If you have enough to make it worthwhile, do it. If the market isn't at the bottom, you can tax loss harvest the new holding. If it's been more than 30 days you can buy back the original holding.
 
We managed to tax loss harvest on some Amazon stock we bought recently - if it keeps going down for the next ten days or so we'll re-buy at an even lower cost than we just sold for.

Thing is, we almost never get a chance to tax loss harvest - just about everything we have was bought years ago and is still showing 50 to 320% unrealized gain. I would love to sell some stuff and rebuy it cheaper in a month, but it seems that almost anything we sell will show a taxable profit - even if it's dropped 25% recently. I'm no kind of stock pro though - is there a way to take advantage of the drop without paying tax on the unrealized gain we've built up over the years?

The market continues to fall and I'd like to sell and re-buy for less - must I ride the market down to my purchase price years ago before being able to do so without showing a taxable profit?
 
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calmloki said:
We managed to tax loss harvest on some Amazon stock we bought recently - if it keeps going down for the next ten days or so we'll re-buy at an even lower cost than we just sold for.

Thing is, we almost never get a chance to tax loss harvest - just about everything we have was bought years ago and is still showing 50 to 320% unrealized gain. I would love to sell some stuff and rebuy it cheaper in a month, but it seems that almost anything we sell will show a taxable profit - even if it's dropped 25% recently. I'm no kind of stock pro though - is there a way to take advantage of the drop without paying tax on the unrealized gain we've built up over the years?

The market continues to fall and I'd like to sell and re-buy for less - must I ride the market down to my purchase price years ago before being able to do so without showing a taxable profit?
Click to expand...

Were you doing automatic dividend reinvestments on any of these?

The reason I ask is because you may have bought some more recently which would show a loss. Some brokers let you choose specific shares.

It was less complicated when I wanted to take a loss as I knew there would be plenty of losses in the holding I choose and TD Ameritrade gives an option when selling to maximize tax harvesting.
 
livingalmostlarge said:
Has anyone already tax loss harvested for the year? Or are you waiting?
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Yes, I had capital gains from the sale of a fund, and took a loss during the same quarter . . .
 
I stopped reinvesting the dividend of an intermediate term bond fund in June and sold some high nav shares that are way down in August to create a $3400 loss to offset income. I'm going to start reinvesting the dividends again once I am beyond the 30 days from the sale which will be in another week.
 
I tax loss harvested to cover gains this year and to give us two years worth of $3000 in reduction to income. I may do another round before year end, but we’ll see. I like what I am in so not sure I want to flip some of my holdings.
 
I had some short term losses I took and sold some gains to take advantage of the offset. Overall I’m close to even.
 
MarieIG said:
Were you doing automatic dividend reinvestments on any of these?

The reason I ask is because you may have bought some more recently which would show a loss. Some brokers let you choose specific shares.

It was less complicated when I wanted to take a loss as I knew there would be plenty of losses in the holding I choose and TD Ameritrade gives an option when selling to maximize tax harvesting.
Click to expand...

Only dividends we reinvested were some Wellesly shares Gal has in her Roth. Good idea, but it is a tiny amount dollar-wise. Still, that is something we could do - but can one loss harvest in a Roth?
 
calmloki said:
Only dividends we reinvested were some Wellesly shares Gal has in her Roth. Good idea, but it is a tiny amount dollar-wise. Still, that is something we could do - but can one loss harvest in a Roth?
Click to expand...

no
 
WooHoo! MarieIG got me to look at individual purchase dates - on Vanguard (not a roth or IRA account) I was using average cost for our cost basis and not seeing much to tax loss harvest. Changed the cost basis method in Vanguard to HIFO (highest in,first out) and all of a sudden we will be able to sell two chunks of VTI we bought on 7-10 and 10-1 last year. Even better, it looks like VTI's ex-dividend date is about to hit, so we should be able to collect the dividend, sell on maybe 10-3 for a substantial loss, and write off long term capital losses. Then sweat through the next month and rebuy.

I think that THAT is the way this is supposed to work!
 
But if you used average cost before, not sure you can change for that particular issue.
 
Montecfo said:
But if you used average cost before, not sure you can change for that particular issue.
Click to expand...

I was going to make the same comment. TLH is fraught with all types of odd details that can trip you up.
 
Montecfo said:
But if you used average cost before, not sure you can change for that particular issue.
Click to expand...
I don't think VG would have allowed them to change the basis method, much less sell shares if average cost had been used for a sale.
 
Well, maybe I'm wrong. Or maybe not? The plan is to sell all the shares of VTI we hold in that account and re-buy them 31+ days later. Our only VTI transactions in that account are the two purchases. I've changed the cost basis method in Vanguard to HIFO, but haven't sold any VTI in that account yet. When I look at Vanguard, doing a pretend sale, two explanations they provide are these:

Avg Cost (Average Cost) The average cost is calculated by dividing the total amount in dollars invested in a mutual fund position by the number of shares owned (the default for mutual funds unless you elect a different method). Once you sell, transfer, or dispose of covered shares of a fund, you'll be locked into the average cost method for any remaining shares of the fund held in your account and any additional shares purchased before switching to another method. The average cost method is easy to use because you won't have to choose which shares to sell, but this method may limit some tax planning strategies because you won't be able to select a specific set of shares to sell.

HIFO (Highest in, first out) Shares with the highest cost basis will be sold first.

My bold added. We haven't sold, transferred or disposed of any of the VTI shares in that account yet, so it seems like we would have the ability to change cost basis from the Vanguard default method. Or such is my hope.
What are your thoughts? Has blind luck been our friend?
 
I’ve been THL’ing since June (when I fired my wealth management company)… they had me in 80+ individual stocks and I’ve been converting all of them to low cost ETF’s. I have harvested nearly $500k in “losses” although I’m just selling individual stocks and immediately purchasing low cost index funds to replace individual stocks.
 
calmloki said:
Well, maybe I'm wrong. Or maybe not? The plan is to sell all the shares of VTI we hold in that account and re-buy them 31+ days later. Our only VTI transactions in that account are the two purchases. I've changed the cost basis method in Vanguard to HIFO, but haven't sold any VTI in that account yet. When I look at Vanguard, doing a pretend sale, two explanations they provide are these:



Avg Cost (Average Cost)The average cost is calculated by dividing the total amount in dollars invested in a mutual fund position by the number of shares owned (the default for mutual funds unless you elect a different method). Once you sell, transfer, or dispose of covered shares of a fund, you'll be locked into the average cost method for any remaining shares of the fund held in your account and any additional shares purchased before switching to another method. The average cost method is easy to use because you won't have to choose which shares to sell, but this method may limit some tax planning strategies because you won't be able to select a specific set of shares to sell.



HIFO (Highest in, first out)Shares with the highest cost basis will be sold first.



My bold added. We haven't sold, transferred or disposed of any of the VTI shares in that account yet, so it seems like we would have the ability to change cost basis from the Vanguard default method. Or such is my hope.

What are your thoughts? Has blind luck been our friend?
Click to expand...

If you are selling all of the shares, the basis assumption will not matter. Though RBs comment does make sense. To me you have not chosen a method until you have used it selling shares.

You always want specific ID, not an assumption. Then you can select the specific shares you wish to sell and get the specific tax outcome you wish.

But if selling all it does not matter.

And once that tranche is liquidated, you can choose whatever method going forward.
 
calmloki said:
Well, maybe I'm wrong. Or maybe not? The plan is to sell all the shares of VTI we hold in that account and re-buy them 31+ days later. Our only VTI transactions in that account are the two purchases. I've changed the cost basis method in Vanguard to HIFO, but haven't sold any VTI in that account yet. When I look at Vanguard, doing a pretend sale, two explanations they provide are these:

Avg Cost (Average Cost) The average cost is calculated by dividing the total amount in dollars invested in a mutual fund position by the number of shares owned (the default for mutual funds unless you elect a different method). Once you sell, transfer, or dispose of covered shares of a fund, you'll be locked into the average cost method for any remaining shares of the fund held in your account and any additional shares purchased before switching to another method. The average cost method is easy to use because you won't have to choose which shares to sell, but this method may limit some tax planning strategies because you won't be able to select a specific set of shares to sell.

HIFO (Highest in, first out) Shares with the highest cost basis will be sold first.

My bold added. We haven't sold, transferred or disposed of any of the VTI shares in that account yet, so it seems like we would have the ability to change cost basis from the Vanguard default method. Or such is my hope.
What are your thoughts? Has blind luck been our friend?
Click to expand...

Ok, I sent you a PM, but see that you are aware of the Wash Sale Rule (which could be an issues with the automatic reinvestment if done within 30 days). I had shut off my DRIP for 31 days after my sale.

If you sell all, will you be able to take a loss? If so, that's fine and you don't have to worry about which method to take. Otherwise, I believe you would look to selling the shares with the highest cost basis. :flowers:
 
MarieIG said:
Ok, I sent you a PM, but see that you are aware of the Wash Sale Rule (which could be an issues with the automatic reinvestment if done within 30 days). I had shut off my DRIP for 31 days after my sale.

If you sell all, will you be able to take a loss? If so, that's fine and you don't have to worry about which method to take. Otherwise, I believe you would look to selling the shares with the highest cost basis. :flowers:
Click to expand...

We have several accounts at VG (his, hers, ours) and had made several new purchases of VTI just over and just under a year ago in her account. We have VTI in our other accounts as well, but they are other accounts. Looking at the VTI in her account showed about half long term and half short term losses - wasn't till I looked at the purchase dates that it dawned that we could wait just a little longer and sell both purchases for a long term loss. It now dawns on me (slowly) that cost basis accounting method doesn't really matter in this specific case as long as it all is being sold.

We don't do DRIP - did for a while, but we manually enter into Quicken and it became way to much work. Now we have dividends go into the VG and when it builds up we invest or divest as we choose.
 
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