What is Tax-Loss Harvesting?
Selling an investment at a loss to offset taxable gains elsewhere, lowering your tax bill.
Educational — not investment advice
Tax-loss harvesting means realizing a loss on purpose — selling a holding that is underwater — so that loss can offset capital gains you have realized elsewhere, and sometimes a limited amount of ordinary income.
It does not require giving up on the position forever; investors often move into a similar (but not identical) holding to stay invested while banking the tax benefit.
The trap most people miss
The wash-sale rule can disallow the loss if you buy back the same or a "substantially identical" security within 30 days before or after the sale. Rules vary by jurisdiction — this is informational, not tax advice; consult a professional.
Frequently asked about Tax-Loss Harvesting
What is the wash-sale rule?
A rule that disallows a claimed tax loss if you repurchase the same or a substantially identical security within a 30-day window around the sale.
Is tax-loss harvesting worth it?
It can defer or reduce taxes, but the benefit depends on your gains, tax rate, and rules in your country. Treat it as a tool, and check specifics with a tax professional.
Related terms
Guides that use Tax-Loss Harvesting
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This definition is for educational purposes only and is not investment, tax, or financial advice. Concepts are explained in general terms; how they apply to your situation can differ. Always do your own research.