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pancak3d t1_j2ack3q wrote

Reply to comment by avalpert in Downsides to tax loss harvesting? by RealAustinNative

Because your forced to use carryover. One of the benefits of THL is you can choose exactly when to do it. With carryover it's not optional.

It's not the end of the world of course but I just prefer to avoid it.

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avalpert t1_j2ad7e5 wrote

Sure, if you are consistently going between high and low tax rate years you might want to avoid carryovers - that isn't typical though.

As for 'choosing exactly when to do it' - you don't get to choose when you actually have losses. For most people, taking advantage of those moments to transfer capital losses from offsetting lower-taxed gains (or becoming gains themselves) to higher-taxed ordinary income offers very real value that you definitely shouldn't actively avoid.

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pancak3d t1_j2amz3s wrote

>to higher-taxed ordinary income

That's exactly my point. If I carryover losses to next year, I may be unable to use them to offset ordinary income because I have capital gains that year. It's an unknown, which is why I suggest avoiding carryover.

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avalpert t1_j2an9qw wrote

But I presume you are keeping them invested in investments you expect to provide gains going forward - so not realizing the losses and carrying them over would also make you unable to offset ordinary income next year...

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pancak3d t1_j2aoeg5 wrote

Yes if the original investment rapidly recovers to the point it has no losses and you couldn't TLH in the next year, and all your other investments also have no losses to harvest, and you dont have significant capital gains, you'll be in a position where you missed the chance to offset some taxes on 3k or less ordinary income. That risk doesn't bother me lol

This sub is largely about simplifying financial choices, so my advice tends to revolve around simplicity

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avalpert t1_j2aop93 wrote

Well yes, it is quite clear you aren't in it for financial optimization so I have no doubt that not doing so doesn't bother you.

Though why that lack of interest in financial optimization on your own end would drive you to suggest others actively avoid doing so is beyond me.

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