2022 has been a turbulent year to say the least, but I am an optimist by nature and am always trying to find the silver lining or turn lemons into lemonade.

So with that being said, how can we turn investment losses into a benefit?  You can do what is called tax-loss harvesting.  If you have gains from investments, you can offset those gains with realized losses.  You may be asking who has gains this year?  There have been a few opportunities to lock in on profits throughout the year or you could have sold investment at the beginning of the year before this correction and then bear market really picked up speed.  Do not just think of stock, bonds, mutual funds etc. as your only investments, but this could also include real estate (raw land, rental property etc.) you may have sold this year or other types of investments.  I do not recommend taking losses for the sake of taking losses, but if you are undecided about should sell an investment or not this could be the deciding factor.  Especially if it could put you into a lower tax bracket.

This can be complicated and there are specific rules to be followed to take advantage of this strategy.  One rule is that short-term losses offset short-term gains and long-term losses offset long-term gains.  You also want to make sure you are aware of the Wash Sale rule that can disallow you from using losses to your advantage this year.

Consult with your own financial or tax professional about your specific situation before making any decisions.

If you have questions or would like to discuss this idea further, please give me a call, 770-336-2053 or email me at:  derrick@brookwoodwa.com.

Derrick Lowery