How Does Tax-Loss Harvesting Work—and Is It for You?

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If you have a portfolio and have sold any stocks at a profit this year, you might be looking for a way to offset the capital gains tax. That’s where tax-loss harvesting comes into play. It’s a way of selling investments that helps you lessen the capital gains tax blow.

But what is tax-loss harvesting, and when should you use it as a financial strategy?

Tax-Loss Harvesting Method of Selling Investments

Sometimes a losing investment can work out well for you. Tax-loss harvesting is when you sell that losing investment. Once you sell it, you use the loss to offset some of your capital gains.