Time to assess year-end opportunities
for tax-loss selling
As we approach year-end, many
investors wonder about the
merits of crystallizing their
gains or losses for the current
tax year. Of course, we would
never recommend selling
purely for tax purposes. But a
strategic approach, with an eye
on your overall financial
picture, is always warranted.
For example, if you expect
your income to take you into a higher bracket over the next few years,
now might be a good time to take some of your gains. If you have
capital losses carried forward from previous years, they can be used to
reduce the tax hit further. Alternatively, you may want to consider
triggering a capital loss to offset the gain.
Excess capital losses for 2014 can be carried back and applied
against capital gains reported in the past three years or carried forward
indefinitely. So if you are hanging on to some investments with a
paper loss and youâ€™re thinking of selling, now might be the time.
In either case, letâ€™s not wait until the last minute. Letâ€™s find some
time to review your portfolio, assess your capital gains and losses, and
decide whether it makes sense to crystallize them this year.