Tax Loss Harvest - when is it "too much?" plus allocation questions.
Hello forum members,
It's possible for me to *short term* tax-loss harvest well into six figures at the moment (sickeningly well!). But how much is too much?
1) Am I correct that there is no advantage to TLH except for the tax-related issues? That is, there are no other gains in efficiency, etc? So, for example, no one would "TLH" in a tax-deferred account for any reason.
2) As a general rule, how does one decide when enough is enough? I can't possibly live long enough to benefit from that much TLH against normal income at $3k per year, and each year it's worth less anyway. I can easily see attempting to match expected or realized short term gains with losses, or expected near-term long term gains, for example. What other obvious considerations are there?
3) If I remain unsure, I can put off much of this potential TLH until next year. But the advice seems to be to TLH "early and often," especially when markets are down. Am I correct that, if one is going to TLH at all, one should *always* take short term TLH (e.g., so that one may offset it against short term gains first). When does one take a "wait and see" approach in case a loss recovers?
4) What sort of down-side risks are there to very large TLH's given the uncertainties of longer time frames? For example, let's say the IRS decides that losses may no longer be carried-forward, or ST/LT capital gains are taxed at higher rates?
So, how much is enough, and how much, if any, is too much?
Thank you!
Hello forum members,
It's possible for me to *short term* tax-loss harvest well into six figures at the moment (sickeningly well!). But how much is too much?
1) Am I correct that there is no advantage to TLH except for the tax-related issues? That is, there are no other gains in efficiency, etc? So, for example, no one would "TLH" in a tax-deferred account for any reason.
2) As a general rule, how does one decide when enough is enough? I can't possibly live long enough to benefit from that much TLH against normal income at $3k per year, and each year it's worth less anyway. I can easily see attempting to match expected or realized short term gains with losses, or expected near-term long term gains, for example. What other obvious considerations are there?
3) If I remain unsure, I can put off much of this potential TLH until next year. But the advice seems to be to TLH "early and often," especially when markets are down. Am I correct that, if one is going to TLH at all, one should *always* take short term TLH (e.g., so that one may offset it against short term gains first). When does one take a "wait and see" approach in case a loss recovers?
4) What sort of down-side risks are there to very large TLH's given the uncertainties of longer time frames? For example, let's say the IRS decides that losses may no longer be carried-forward, or ST/LT capital gains are taxed at higher rates?
So, how much is enough, and how much, if any, is too much?
Thank you!
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