Realised capital losses offset realised capital gains, reducing tax owed. In the US, up to $3,000 of net loss can be applied against ordinary income each year, and any excess carries forward indefinitely.
The wash-sale rule prevents claiming a loss if you rebuy the same or substantially identical security within 30 days.
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Open Financial OS →Frequently asked questions
Can I harvest losses every year?
Yes — tax-loss harvesting is a common annual practice, especially in volatile years. Avoid triggering the wash-sale rule with careful fund selection.
Related terms
Capital gain
The profit made when you sell an investment for more than you paid.
Tax-loss harvesting
Selling investments at a loss to offset capital gains and reduce tax owed.
Wash-sale rule
A rule that disallows a tax loss if you rebuy the same or 'substantially identical' security within 30 days.
Cost basis
The original amount you paid for an investment, used to calculate capital gains at sale.