Have you ever looked at your investment statement during a down market and thought, “This is nothing but bad news”? It’s a natural reaction—no one likes seeing red numbers.
But what if some of those temporary losses could actually be turned into a strategic tax advantage that saves you money, improves long-term outcomes, and keeps your investment plan on track?

I want to explain a smart planning tool we use behind the scenes to help clients reduce taxes and build wealth more efficiently—tax-loss harvesting.

What Is Tax-Loss Harvesting?

Tax-loss harvesting is a strategy where we intentionally sell an investment that is below its original purchase price in order to realize a capital loss.

That loss isn’t wasted. It becomes a tax asset that can:

1. Offset realized capital gains in your portfolio
2. Reduce your taxable income by up to $3,000 per year (if losses exceed gains) for single and married filing jointly filers
3. Carry forward indefinitely into future tax years

Put simply: Temporary losses in your portfolio can be turned into long-term tax savings.

How It Works (And What Happens After the Sale)

We don’t sell just to hold cash. We reinvest the proceeds into a different, but similar investment that maintains the long-term intent of your portfolio.

This ensures you remain invested and aligned with your plan.

The reason we use a different investment: To avoid the IRS wash-sale rule, which disallows the loss if you buy the same or substantially identical security within 30 days before or after the sale.

So, tax-loss harvesting is less about trading—and more about tax-efficient repositioning.

Where Tax-Loss Harvesting Applies

This strategy is only used in taxable investment accounts, commonly called non-qualified accounts. Examples include:

• Individual brokerage accounts
• Joint taxable accounts
• Trust accounts

It does not apply to accounts like:

• IRAs
• Roth IRAs
• 401(k)s

Why?
Because those accounts already have built-in tax advantages, so losses don’t generate any tax benefit.

When Do We Do It?

Opportunities can arise at different times throughout the year, but especially when:

• Markets experience volatility
• Prices drop quickly
• Individual positions underperform

Is This Market Timing?

No. Tax-loss harvesting isn’t about:

• Predicting future prices
• Timing peaks and valleys
• Making emotional decisions

It’s about using market movements—good or bad—to improve the tax efficiency of your portfolio while keeping you invested.

You don’t win by guessing correctly.
You win by planning correctly.

Why Tax-Loss Harvesting Matters

Taxes are one of the quietest drains on wealth over time.

Reducing them—legally, strategically, and methodically—can create meaningful advantages, especially for long-term investors.

Tax-loss harvesting can help you:

• Offset gains from rebalancing or asset sales
• Lower taxable income
• Improve after-tax returns
• Build wealth more efficiently

It doesn’t guarantee profits and it doesn’t eliminate market risk—
but it helps you keep more of what you earn, which compounds over time.

What Should You Do?

If we manage your taxable accounts, we already evaluate and execute this strategy for you when appropriate.

If you’re unsure whether tax-loss harvesting applies to your situation, or you manage your own investments and want guidance, we’re happy to help you review the opportunity.

Because when it comes to building wealth, it’s not just about what you earn.
It’s also about what you keep.

Final Thought

Down markets are uncomfortable, but they’re also filled with opportunities—if you know how to use them.

Tax-loss harvesting is one of those opportunities.
It turns volatility into strategy, and temporary losses into long-term advantage.

If you’d like to explore how this fits into your financial plan, reach out anytime.
We’re here to help you plan wisely, invest efficiently, and keep more of what you’ve worked hard to build.