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Investment Insights

A Tax-Loss Harvesting (TLH) Debrief

February 7, 2022
  • Tax-loss harvesting (TLH) strategies are effective in reducing immediate capital gains tax liability payments for individuals, dependent on different variables.
  • Such strategies may defer tax liabilities indefinitely until the taxpayer chooses a means of liquidation or even eliminate the liabilities if the taxable assets are held until death.
  • Most of the benefits apply to federal taxes since states have different tax laws, sometimes limiting the advantages available on a state tax reporting level.
  • The degree of success depends on many factors including applicable tax rates, income levels, size of flows, market volatility, and investment granularity.
  • There are seemingly endless ways to implement a TLH strategy depending on the taxpayer’s preferences – manually, automatically, algorithmically, given specific timeframes, based on tolerance bands, and more.
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Summit Financial, LLC, an SEC registered investment advisor firm, established in November 2018 is a wholly owned subsidiary of Summit Financial Holdings and is the successor firm of all the legacy investment advisory and financial planning business of Summit Equities, Inc. (registered with the SEC in 1991) and Summit Financial Resources, Inc. (registered with the SEC in 1983)