Submitted by RealAustinNative t3_zz8vq6 in personalfinance
avalpert t1_j2a8me3 wrote
Reply to comment by pancak3d in Downsides to tax loss harvesting? by RealAustinNative
Why would you want to avoid carryovers? They can be used in future years either to offset higher-taxed ordinary income or future capital gains.
Accumulating stashes of capital loss carryovers is a valuable part of a comprehensive tax-management strategy.
ahj3939 t1_j2aap5v wrote
I rather not have to track it. I rather sell something at a gain and buy back right away.
avalpert t1_j2abhct wrote
It's pretty silly to not take full advantage of the tax savings for something that your tax software will track for you even if you are too lazy to look at last year's tax return yourself.
pancak3d t1_j2ack3q wrote
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.
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.
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.
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...
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
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.
pancak3d t1_j2apagn wrote
Alright!
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