Tax loss harvesting is a rare profitable investing strategy. Who wouldn't want a tax break from selling bad investments? Although most experts advise harvesting losses at the end of the year, it can be done at any time. Which approach is best? It all depends on your situation and the market. Keep reading to learn more.

How Often Should I Harvest Losses?

Tax loss harvesting is a rare profitable investing strategy. Who wouldn't want a tax break from selling bad investments? Although most experts advise harvesting losses at the end of the year, it can be done at any time. Which approach is best? It all depends on your situation and the market. Keep reading to learn more.

February 17, 2023

How Often Should I Harvest Losses?

Tax loss harvesting is a rare investment strategy in which a loss actually leads to a gain. After all, who would not be thrilled by a reduction in their tax liability upon the sale of lost investments? The end of the year is when most experts recommend harvesting losses, but there is an argument to be made for doing it at any time.

So, which method should be used? The best time for you to take advantage of tax-loss harvesting will vary based on your specific circumstances and the state of the market.

Let’s jump right in!

How often should you harvest losses on crypto or any stock investment?

It all depends on the investment you are considering. You can experience losses in the cryptocurrency market as often as you choose. The biggest caveat is that there is always a transaction involved when you suffer a loss. There will be transaction costs involved, for instance, if you own Bitcoin and need to transfer it to Ethereum and then back again to effectively suffer a loss. Always be sure that the tax gain exceeds the transaction costs.

Note:  The "wash sale rule" places restrictions on stocks. 

For example, if you sell Facebook or Meta shares and then sell Meta for a loss, you cannot definitely buy Meta again for 30 days and still record the loss on your financial statements. Therefore, you can use cryptocurrency as much as you like as long as you are aware of the associated transaction fees. Except for things like index funds, where you can take an S&P 500 and replace it with the Russell 2000 funds is similar and close enough like where they are 99% the same, but different enough for tax purposes where you can still take that loss on paper without the wash sale rule, you are essentially limited by a 30 day window for any stocks, bonds, or more traditional securities.

Read more: How a Wash Sale Cleans Your Tax Loss

The Benefits of Year-End Tax-Loss Harvesting

Investors that rely mostly on taxable investment accounts and are under a tight time crunch would be wise to harvest tax losses at the end of the year.

1. Expenses and Ease of Use

It happens at the same time as other year-end events. You can get a tax break if you sell investments that are losing money in your non-qualified accounts and put the money into your 401(k) or IRA. Deals can be made with little trouble. To reinvest your profits, you will only have to go through the motions of selling your losses and looking for other assets once. It could help make business deals cheaper. If you only trade a few times a year, you can save money on the fees you pay to buy and sell.

Read more: 10 Tips for End-of-Year Tax Planning

2. The Aftermath of January

As a general rule of thumb in the stock market, January is considered to be the best month to buy since stock prices tend to climb more rapidly than in other months otherwise known as the January Effect.  Investors who take advantage of tax losses before the end of the year are in a good position to reap the rewards of January's price gains, particularly if they sell a stock and then repurchase it 30 days later without violating the wash-sale rule.

If an investor thinks they'll lose money if they sell an asset in November, they can buy it back 30 days later as long as they've owned it for at least 30 days before the sale. You can take advantage of a tax loss if you sell an asset you bought on October 15 but that lost a lot of value by November 15.

If you sold stock on November 30 expecting it to rise in value, you might legally buy it back on December 16 without violating the wash sale rule. Historically, the stock market's annual end-of-year rally aka the Santa Claus Rally has begun during the final week of the year and continued through the first two trading days of the new year.

3. Gain/Loss Matrix Optimization

The most money can be saved on capital gains tax if losses are used to offset profits once a year. As an example, let's say you made $2,500 in short-term capital gains this year. If so, you can choose which losing investments to sell and how much of each one to sell based on how close they get you to your $2,500 goal. Don't forget that the most you can write off on your taxes this year is $3,000. Amounts that are more than $3,000 can be moved to the next year.

Learn more: Bummed by Crypto Losses? Here are some tax tips!

The Benefits of Year-Round Tax-Loss Harvesting

Active investors may not like the idea of waiting a whole year to reap the benefits of tax loss harvesting. Having access to seasonal market trends all year round may make a year-round tax loss plan the best option. Let’s take a look at some of those incentives.

1. Keeping Up with the Portfolio Strategy

Gain capture has both positive and negative aspects. For instance, when you made a nice profit, but now your asset allocation is all screwed up, taking advantage of losses throughout the year might help your portfolio and your tax situation. The trick is to have other assets ready to take the place of the one you are selling at a loss. If you are selling a losing stock, for instance, you will want to make sure you are buying another one. While it may sound simple, it is possible that your only viable alternative options are priced exactly where analysts expect them to be.

2. Market Data Available Year-Round

Despite the fact that there is a correlation between the January Effect and claiming tax losses at the end of the year, there are many patterns that cannot be accounted for by looking back only a year.

The months of January and April have historically been successful if you're hoping to make gains. The final three months of midterm election years are usually favorable for stocks if you are riding an election-year wave. June is not known for producing strong returns if you are looking for losses that may be harvested.

3. Greater Flexibility in Addressing Economic Conditions

The stock market adapts to all pressures, from geopolitical factors to social mainstream occurrences. Your portfolio's reaction to a variety of tides can be improved with a year-round loss harvesting approach.

Strategies for Maximizing Your Tax Deductions All Year

Opportunities for tax-loss harvesting exist throughout the year, and you do not have to be constantly monitoring your brokerage account to take advantage of them. Instead, it is better to establish a plan and then employ automated trading tools to carry it out.

1. Create a Plan

You could set loss criteria to assist investors make harvesting decisions all year round. If you are worried about losing too much money, limit your portfolio's total loss to 15%. Using predetermined levels to signal a sale instead of reacting to market fluctuations might help investors make rational decisions.

2. Automation Allows Human-Free Completion

Investors can automate harvesting with trading instruments like sell-stop and limit orders once loss targets have been established. You can use limit orders to lock in profits at a specific price, and you can use stop-loss orders to restrict your losses.

3. Stay Flexible with Your Strategy

Many doors can be opened by adopting a loss harvesting technique that works all year. Any plan to reap losses should be as adaptable as possible. You should hold off on harvesting while market volatility is high, as doing so could cause you to miss opportunities in the market. For this reason, waiting until the end of the year to harvest may prove advantageous in turbulent years. 

Whether you decide to employ a year-end or a year-round strategy as your foundation, remember that adaptability is the golden rule that will serve you well in any year and any market.


Capital gains taxes can be kept low if gains and losses are taken into account once a year. If done right, tax-loss harvesting lets investors lower their current tax bill, rebalance their portfolios, and keep more money invested.

Harvesting tax losses is a smart way to keep taxable profit loss to a minimum. Investors may be able to reduce their tax bills by selling loss-making securities at the right time and making up for those sales with investments that make money. Tax loss harvesting is closely related to wash sale laws, which limit the tax benefits and treatment that can be gained by selling and buying back the same investment within a certain amount of time.

I hope this information was helpful! If you have any questions, feel free to reach out to us here. I’d be happy to chat with you.

Vincere Tax can help you with the tax implications of business taxes, stocks, bonds, ETFs, cryptocurrency, rental property income, and other investments. 

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This post is just for informational purposes and is not meant to be legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor. Vincere accepts no responsibility for actions taken in reliance on the information contained in this article.

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