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However, market conditions change quickly, so to leverage this opportunity most efficiently, there are varying factors to keep in mind when it comes to tax-loss harvesting, some of which include:

📌 Understand your limits: According to the IRS, if capital losses exceed capital gains, up to $3,000 ($1,500 if married and filing separately) can be deducted in a given year. Any leftover losses can then be carried to future tax years until the amount is depleted, dependent on state tax rules.

📌 Beware of the wash-sale rule: This prohibits you from purchasing the same or “substantially identical” investment 30 days before or after selling an investment for a loss. To avoid a complete wash, being aware of what constitutes an identical investment, as well as the timing of your purchase is key.

📌 Think outside the box: Beyond stocks and mutual funds, tax-loss harvesting can be leveraged amongst fixed-income holdings (such as bonds and CDs), especially as we now see the impact rising interest rates have had on these investment vehicles.

📌 Have an interim strategy: If blocked by the wash-sale rule, you can still take a tax-loss harvesting approach by reinvesting cash from a stock sale into other investments, such as index funds.

📌 Ensure the sale makes sense: Saving on taxes is a plus, but sometimes staying put might be the wisest move.

Make note: Now is a great time to look at tax loss harvesting opportunities, but there’s a lot to know. At the end of the day, you have to weigh the value being provided versus the time you may put into such an endeavor.