Should I use capital loss to offset long term capital gains?

Forum|Forum|7 years ago
August 23, 2018
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I have long term capital gains from stock sale, used to purchase my home. These are taxed at 15%.

I currently own stocks with capital losses (both short and long term). I intend to sell these stocks at a loss because they are bad investments.

My question: My income from employment places me in the 30+% tax bracket. Is it wiser to sell my bad investments this tax year and offset my long term capital gains, or to wait until next year to offset my income? It seems wiser to wait, but I read that I can only deduct $3k per year from my income.

knowmoretax

Employee

Hello Jadabb,

From a tax standpoint only - it would be more beneficial for you to sell the stocks (both short-term and long-term holding periods) now. The reason is this, you can use all of the loses you will have realized when the securities are sold (up to your long-term gain amount plus an additional $3,000). If you don't sell the securities with loss positions until next year then you'll only be allowed to deduct $3,000/year until the losses are used up.

I hope my answer helps you.

Thanks,

Jack

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