Tax Harvesting

This is the time of year when people may be looking over their portfolios for possible changes looking ahead to next year. Some people might be re-balancing by selling some of their stock positions and buying bonds. Others may be selling corporate bonds and buying real estate investments. For those looking ahead to tax time, one strategy is to sell some of your losers to take advantage of the tax loss you are allowed to deduct off your taxes. You are generally allowed to deduct up to $3000 in losses against your income. Any amount over this can be carried forward to future years if needed. As always, consult a tax professional to see what the best strategy is for you. Once you have identified an investment position to sell, you can look for new positions to buy so you can stay invested in the market. One thing to keep in mind is this, you cannot repurchase the same investment you just sold, for 30 days. This is known as the wash rule. Once 30 days has passed you can repurchase it if you want, but most people just find a similar stock or fund to do the job. Take advantage of the tax laws and rules to help you make some lemonade out of your lemons. It also helps to not get too emotionally attached to your investments. Remember, you want to build an investment portfolio that has a strategy, not a scrapbook of stock names that are blast's from the past! The more emotion you can take out of investing, the better off you'll be in the long run!