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Joshua's Beginner's Investing Blog

By Joshua Kennon, About.com Guide to Beginner's Investing since 2001

Have You Thought About Tax Loss Selling?

Friday December 26, 2008
If there are investments that you are going to need to sell in the short-term, or that you think don't have a decent chance of long-term recovery, you may consider the possible wisdom in engaging in what is known as "tax loss selling". This will allow you to write off a portion against your current income in fiscal 2008, and if you exceed a specific level, against future years as well. You can also offset any capital gains you generated in a practice known as "tax harvesting". For those with money in regular brokerage accounts - that is, outside of tax free accounts such as a 401k or Roth IRA - this can make good sense and save you a lot of cash come April 15th.

Not sure if your capital gains would qualify as short-term fully taxable or long-term lower-rate? Take a second to read Capital Gains Tax Holding Periods to find out the answer.

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