December is harvest month for tax savings

How to claim a capital loss while keeping your investment strategy intact.

Matthew Elder 4 December, 2015 | 6:00PM

Markets have taken a beating in recent months and, while there's a chance some investments could recover in the near future, there's something to be said for selling a losing stock, bond or other capital investment now, regardless of its positive prospects.

By doing so you can use the resulting capital loss to offset capital gains realized during the same year or during one of the three preceding years -- and in the process recoup some of the tax you paid on those gains. You also can retain the loss to reduce capital gains realized in any future taxation year.

If the money-losing investment provides market exposure you no longer wish to have, the simplest solution is to sell it and replace it with something else. But if selling would throw off your asset-allocation strategy or disrupt a long-term investment plan, then you can sell it and replace it with something similar. The latter strategy is known as tax-loss harvesting.

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Matthew Elder

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