My Blog, Your Money

Here’s another investing tactic: Tax Selling.  If this is new to you, the concept is very simple.  All it is is selling the stocks you’re losing money on to reduce your capital gains for the year.  This in turn reduces tax liability.  This is usually done at the end of the year when a stock is unlikely to make any significant gains before the end of the year.  Come December 31, I know I’m probably going to sell some of my losers.

One has to be careful though.  When selling stocks for a loss, you must wait 30 days before you can repurchase the shares.  This is known as the wash-sale rule.