Here is how to take advantage of the tax loss harvest in the midst of pricing volatility

In the middle of Stock market volatilityMany investors are looking for Portfolio protection. But they could miss a first tax planning Opportunity, experts say.

The strategy, known as the name Tax loss harvestsells the loss of assets of a brokerage account to compensate for other investment gains to reduce taxes. Losses are generally used to compensate for gains, such as those of investment sales or Capital winning distributions Based on investment funds or grant funds on the stock market.

Once the losses exceed the benefits, you can subtracted up to $ 3,000 regular income. After that, you can undergo excess losses in the years of future taxation indefinitely.

“He is looking for a silver lining during a spilled, rainy and cloudy day,” said the certified financial planner Sean Lovison, founder of the financial services built by the Philadelphia region.

More personal finances:
Do not miss these tax strategies during the price sale, say the experts
Sale during the worst days of the market can hurt you, shows the search
3 strategies to ensure the safety of your money in the midst of market volatility

Investors should weigh the tax harvesting opportunities whenever there is the volatility of the stock market markets, according to experts.

“It should be throughout the year,” said Lovison, who is also a certified accountant.

The tax loss harvest could be attractive with the S&P 500 index Still down more than 15% compared to a summit of all time in February at noon on Tuesday. The index briefly entered the bear market territory – more than 20% reduction on its file – during Monday session in the midst of tariff uncertainty.

Here are some key elements, namely on the harvesting of tax losses, say the financial advisers.

Although harvesting the tax loss seems simple, the current withdrawal of the market requires a “very granular” approach, according to the CFP Judy Brown at SC & H Group in the Washington, DC and Baltimore region.

After many years of market growth, investment losses could include more recent purchases, said Brown, who is also a certified public accountant. It was busy identifying specific “tax lots”, which are transaction records showing the date of purchase and the price of an asset.

You need systems to “quickly find these lots” for sale for the benefit of tax loss harvest, said Brown.

One of the advantages of the tax loss harvest is that you can sell assets for loss and reinvest a similar investment to maintain the exhibition, said Lovison.

But you must know the “Sale of sales rule“Who blocks tax relief for the purchase of an” significantly identical “asset within 30 days before the sale, according to the IRS.

Although individual actions can be easy, there are fewer IRS advice on the way “substantially identical” applies to common investment funds and ETFs, according to experts.

For example, you could sell a family of funds with large capitalization for another from a different family when the holdings are slightly different, said Lovison.

But if you buy the same exact index holding identical funds, “this may not pass the sniffing test (IRS),” he said.