By Bruce McCain
As we approach year end, investors will again start harvesting losses to reduce their taxes. Too bad those trades are not as profitable as they could be. Like most market transactions, tax-loss selling works best when you avoid trading with the crowd, so timing can make a big difference.
Tax-Loss Rules at a Glance
Under current tax law, you can write off the loss on an investment if you do not buy a “substantially similar” security within 30 days before or after the sale that generates the loss. For example, you cannot buy 100 shares of a stock and then sell the 100 you already own within 30 days of the purchase, nor can you sell the original 100 shares of a stock and buy shares back within 30 days.