Capital Gains Loss Harvesting Calculator

Tax-Loss Harvesting Basics

Sell investments at a loss to offset capital gains for the year. Losses first offset same-character gains: short-term losses offset short-term gains, long-term losses offset long-term gains. Any excess loss can offset the OTHER character of gain. Remaining loss after offsetting all gains: deduct up to $3,000 against ordinary income ($1,500 if married filing separately). Excess carries forward indefinitely.

The Wash Sale Rule (IRC §1091)

Cannot claim loss on sale if you buy 'substantially identical' security 30 days before OR after the sale. Loss is disallowed and added to cost basis of replacement shares. Applies to spouse's accounts and your IRA. Workarounds: (1) Sell SPY, buy IVV — different fund, same index, not 'substantially identical'. (2) Wait 31 days. (3) Sell at year-end, buy back in January if 31+ days pass. Aggressive same-ticker swap is auditable.

Match Loss Harvesting to Tax Bracket

Most valuable in years when you have high short-term capital gains (taxed at ordinary rates 32-37%) — saving 32-37% per dollar of harvested loss. Less valuable against LTCG (15-20% rate). Worth considering in any year with $3K+ losses to deduct against ordinary income. Always harvest losses BEFORE Dec 31 — calendar year not tax year matters.

Common Loss Harvesting Mistakes

Mistake 1: triggering wash sale by buying same ticker in IRA within 30 days. Mistake 2: harvesting losses in low-income year (waste of deduction). Mistake 3: not tracking carryforwards across years on Schedule D. Mistake 4: short-term loss carryforward — eventually becomes long-term loss after carry, losing tax efficiency. Mistake 5: forgetting basis adjustment when buying back after wash.

Sources: IRC §1211, §1212 (capital losses), §1091 (wash sales). Last updated: May 2026. Not tax advice.