The U.S. market gained more than 25% for the year to date through mid-December 2024. That’s a healthy showing by any measure. It doesn’t seem like it would be a market environment that’s conducive to tax-loss selling. But unless your strategy is to buy only U.S. stocks, you may indeed have opportunities to realize tax losses in your portfolio, which you can use to offset gains elsewhere. That’s because other market segments haven’t performed nearly as well.
It’s important to note that tax-loss selling is only a worthwhile strategy if you have taxable accounts. To benefit from a tax loss that in turn can help you save on taxes, you need to find holdings in your taxable portfolio that are trading below your cost basis — your purchase price adjusted upward to account for any commissions that you paid along with reinvested dividend and capital gains distributions. There are different methods for determining cost basis. The specific share identification method for cost-basis elections provides the most opportunities for tax-loss selling or gain harvesting because it allows you to cherry-pick specific lots of a security to sell. But it’s important to note that the average cost basis is usually the cost-basis election default for mutual funds, while the default cost basis election for individual stocks is often first in, first ou
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