In a balanced portfolio, there’s always a chance of some investments underperforming. While backing losers isn’t ideal, there’s a way to ease the pain when it comes to year-end taxes.
Tax-loss harvesting is a strategy whereby portfolio losses can be offset against taxes on capital gains owed when you sell assets at a profit. If the losses exceed the profits, one can also offset taxes on other capital gains, like those from property or business sales.
Additionally, these losses can be employed to offset taxes on ordinary income — up to $3,000 a year in total can be offset this way — and losses not recovered in one year can be ...