Harvesting gains and losses

It's tax planning season! As the end of the year approaches, one of the most popular questions my clients ask is, do I need to do anything before the end of the year to minimize my taxes? One popular strategy is harvesting capital gains or losses. What this means is that if you have an investment portfolio, you may have what are called unrealized gains or losses. This simply means the change in your investments' value since you bought it. "Harvesting" means selling that asset so that you can claim the gain or loss on your taxes. If you had another transaction this year that resulted in a big capital gain, for example the sale of a rental property, it might make sense to check and see if you have any unrealized losses in your portfolio that you could use to offset some of that gain. On the other hand, if your income is lower this year than usual, or if you have a large capital loss passing through from a business you own, you may want to harvest some capital gains to pay taxes on them at your lower rate. This is a complicated strategy that you will want to discuss with both your CPA and financial advisor.