While many investors wait until December to consider capital gains and losses, starting the process in September can offer greater flexibility, fewer surprises, and more opportunities to optimize your tax outcome.

At BCA Private Wealth, we work closely with clients to identify tax-saving strategies like tax-loss harvesting—an approach that allows you to use investment losses to offset capital gains, reduce taxable income, and enhance after-tax returns.

Understanding Tax-Loss Harvesting

Tax-loss harvesting is a year-end tax strategy where you sell investments that are currently worth less than what you paid for them. This allows you to “harvest” the loss and use it to offset realized capital gains from other investments. If your total losses exceed gains, you can deduct up to $3,000 from ordinary income (or $1,500 if married filing separately), with any losses exceeding the maximum carried forward to future years.

For example:
If you realized $40,000 in capital gains earlier in the year, and you identify $20,000 in eligible losses, harvesting those losses could cut your taxable gain in half, potentially saving you thousands in taxes depending on your bracket.

Avoiding the Wash Sale Rule

One critical consideration in tax-loss harvesting is the IRS wash sale rule, which disallows a loss if you buy the same or a “substantially identical” security within 30 days before or after the sale. Failing to follow this rule means your tax deduction will be postponed, eliminating the near-term benefit.

To maintain market exposure and still follow the rules:

• Replace sold securities with ETFs or mutual funds that track similar—but not identical—indexes.
• Use broadly diversified funds that provide similar exposure without triggering a wash sale. Consult with our team before repurchasing any sold investment.

Reinvesting with Purpose

Selling a losing investment isn’t just about tax savings, it’s an opportunity to rebalance and improve your portfolio’s long-term strength. We help clients:

• Shift into more tax-efficient investment vehicles
• Diversify holdings that may have become overly concentrated
• Align risk exposure with updated goals and time horizons

Tax-loss harvesting isn’t a one-size-fits-all solution, and we take care to ensure your reinvestment strategy keeps you on track toward your objectives while reducing your tax burden.

Tax-Loss Harvesting is one of the most underrated ways to monitor your wealth. At BCA Private Wealth, we provide proactive year-round planning for clients in Greenville, Clemson, and across the Southeast. Let’s schedule a discovery call and review how we can help you optimize your portfolio—not just for growth, but for tax efficiency.

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BCA Private Wealth
15 Halton Green Way
Greenville, SC 29607

Disclosure:

BCA is a Securities and Exchange Commission registered investment advisor. The advisory services of BCA Private Wealth are not made available in any jurisdiction in which BCA Private Wealth is not registered or is otherwise exempt from registration.

Please review BCA Private Wealth Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.

This material is prepared by BCA Private Wealth for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.