Financecalendar_todayLast updated: Apr 2026
What is Tax-Loss Harvesting?
/tæks lɔːs ˈhɑːrvɪstɪŋ/
Tax-loss harvesting is the practice of deliberately selling investments that have lost value to lock in those losses, then using them to offset gains elsewhere and reduce your taxable income. The goal is to minimize what you owe to the taxman while keeping your overall investment strategy intact.
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Everyday Example
You bought a tech stock that's now worth £3,000 less than you paid. You sell it to claim the loss, then immediately buy a similar (but not identical) tech fund to stay invested in the sector without creating a 'wash sale.'
publicReal-World Application
“Wealthy investors and their advisors do this routinely at year-end; robo-advisors like Vanguard Personal Advisor Services now automate tax-loss harvesting for portfolios.”
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Did you know?
Tax-loss harvesting has been legal since the modern tax code's inception, but it became mainstream among retail investors only after robo-advisors made it automated and accessible.
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Key Insight
Market downturns aren't just losses—they're opportunities to make the taxman subsidize your investing by turning paper losses into real tax savings.
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