{"id":8523,"date":"2024-10-01T15:07:25","date_gmt":"2024-10-01T15:07:25","guid":{"rendered":"https:\/\/dailywashingtoninsider.com\/index.php\/2024\/10\/01\/mark-these-tax-loss-selling-dates-on-your-calendar-updated-2024\/"},"modified":"2024-10-01T15:07:25","modified_gmt":"2024-10-01T15:07:25","slug":"mark-these-tax-loss-selling-dates-on-your-calendar-updated-2024","status":"publish","type":"post","link":"https:\/\/dailywashingtoninsider.com\/index.php\/2024\/10\/01\/mark-these-tax-loss-selling-dates-on-your-calendar-updated-2024\/","title":{"rendered":"Mark These Tax-loss Selling Dates on Your Calendar (Updated 2024)"},"content":{"rendered":"

As the end of 2024 nears, investors may want to consider how they can use tax-loss selling to their benefit.<\/strong><\/p>\n

Buying stocks low and selling them high is ideal, but sometimes investments go sour. In such cases, all hope is not lost \u2014 at the end of the year, investors can sell investments that provided losses instead of capital gains.<\/p>\n

The money made from selling off losses can then be used to offset capital gains liabilities incurred for the year. This is the principle behind tax-loss selling, also known as tax-loss harvesting. <\/p>\n

This valuable strategy offers investors another opportunity to lower their tax bill for 2025, according to the Wall Street Journal. In effect, it seems you really can win for losing. So let\u2019s take a look at how tax-loss selling works.<\/p>\n<\/p>\n

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How does tax-loss selling work? <\/h3>\n

Tax-loss selling is the process of selling stocks at a loss to reduce the capital gains earned on an investment. Since capital losses are tax deductible, they can be used to offset capital gains and reduce tax liability on an investor\u2019s tax return.<\/p>\n

Tax-loss selling generally involves investments related to huge losses, and because of this, these sales generally focus on a relatively small number of securities within the public markets. However, it\u2019s important to be aware that if a large number of sellers were to execute a sell order in tandem, the price of the securities would fall.<\/p>\n

It\u2019s also worth noting that once selling season has ended, shares that have become largely oversold can bounce back. In addition, the fact that tax-loss selling often occurs in November and December means the most attractive securities for tax-loss selling are investments that are likely to generate strong capital gains early in the next year.<\/p>\n

As a result, a potentially beneficial strategy would be to buy during the selling season and sell after the tax loss has been established. This approach could be used on either long-term capital gains or short-term capital gains.<\/p>\n

Some investors may consider selling an asset at a loss, deducting that loss for a tax gain and then purchasing the same stock again in an effort to evade taxes. This is known as a wash sale, and is prohibited by the Internal Revenue Service (IRS); if the IRS deems a transaction to be a wash, the investor would not be allowed any tax benefits.<\/p>\n

To avoid this situation, investors must wait 30 days to repurchase shares that were originally sold for a loss. Additionally, shares sold for a loss must have been in the investor\u2019s possession for over 30 days.<\/p>\n<\/div>\n

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What are the important tax-loss selling dates for 2024? <\/h3>\n

Tax-loss selling comes with many potential benefits, but it nevertheless has some strings attached. <\/p>\n

The key thing for investors to remember is that it has deadlines. For investors filing their taxes in Canada, the last day for tax-loss selling in 2024 is December 27. Stocks purchased or sold after this date will be settled in 2025, so any capital gains or losses will apply to the 2025 tax year. The system differs for those filing their taxes in the US, and based on information from the IRS, the last day for tax-loss selling this year is December 31.<\/p>\n

Investors should always consult with an expert or review relevant tax documents directly for complete answers. The information contained in this article should not be considered tax advice.<\/p>\n<\/div>\n

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The flip side of tax-loss selling <\/h3>\n

As tax-loss selling starts, opportunities can open up for those who have spent the year on the sidelines.<\/p>\n

In her piece \u201cHow Bout Tax Loss Buying?,\u201d Gwen Preston of Resource Maven explains that Canaccord Genuity (TSX:CF,OTC Pink:CCORF) has found that from mid-November to mid-December, S&P\/TSX Composite Index (INDEXTSI:OSPTX) stocks down more than 15 percent year-to-date underperform the index by nearly 4 percent. However, from mid-December to mid-January, those same stocks outperform the index by 3.6 percent.<\/p>\n

\u201cThat outperformance is on top of gains the TSX reliably generates over that time frame,\u201d Preston explains. \u201cSo instead of only seeing tax-loss selling as a time to generate tax credits by dumping dogs, let\u2019s look at the opportunity to profit.\u201d <\/p>\n<\/div>\n

<\/span><\/p>\n

Watch Gwen Preston of Resource Maven discuss tax-loss selling.<\/em><\/p>\n<\/div>\n

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How can investors time tax-loss selling? <\/h3>\n

Regardless of whether you\u2019re engaging in tax-loss selling or buying, Steve DiGregorio, portfolio manager at Canoe Financial, recommends acting swiftly and aggressively as \u201cliquidity will dry up.\u201d <\/p>\n

He sees the second and third week of December as the ideal window, which is well ahead of the \u201cSanta Claus rally\u201d \u2014 the period around the last week of December when stocks tend to rise ahead of a healthier market in January.<\/p>\n

For now, the year isn\u2019t over yet, so whether you\u2019re tax-loss selling or buying, there\u2019s still time to talk to your accountant or financial advisor to determine which approach is best for you.<\/p>\n<\/div>\n

Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n

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