Tax Loss Selling – Turn a Loss Into a tax Win! When it comes to investing let’s face it, you win some, you lose some. While capital gains are always the goal, sometimes selling shares incurs a loss – but is it all bad? Not when you consider the “glass half full” strategy – “Tax Loss Selling”. What is tax loss selling? Tax loss selling is a tax planning tool that can reduce potential tax liability by minimizing capital gains. So, if you have realized capital gains during the year, and don’t mind selling investments at a loss to help reduce your taxes, then tax loss selling is a strategy for you. How it works Let’s say you have two securities, ALPHA and BETA. During the year you decide to sell security ALPHA which would yield a capital gain, but you also held security BETA which underperformed and has an unrealized loss. If you sold security BETA as well, you could recognize the losses and reduce your overall capital gain, which reduce the taxes you pay. In this way, your loss could become a win! What else you should know You (and your spouse) cannot repurchase the same shares within 30 days of the sale (that means before or after the sale). Otherwise, the CRA will consider your loss as superficial. That means the loss will be denied and added back to the cost of the newly purchased shares.This selling strategy should only be considered when dealing with a non-registered portfolio.If you have had gains in the previous three tax years and are expecting capital losses in the current year, you may be able to carry those losses back three years.Conversely, capital losses this year may be carried forward if you are anticipating gains in the future. Capital losses can be carried forward indefinitely with no expiry. In order to take advantage of the tax savings of this strategy, remember that December 27, 2019 is the last day to sell your shares. This is because only trades settled on or before December 31 will be considered for tax purposes. If you would like more information on tax loss selling, give us a call today and let us help you WIN at the tax game.