Tax Loss Harvesting is a strategy to attempt to improve the after-tax return on your taxable investments. It aims to accomplish this by selling tax lots of securities that have gone down in value to harvest a tax credit. This credit has three main benefits.
Tax losses are effectively an interest-free loan which defers capital gains taxes you would otherwise owe into the distant future.
After offsetting realized gains, you can use any remaining tax losses to deduct $3,000 from your ordinary income each year.
You can roll over any remaining losses into later years, so that you can defer your capital gains and deduct up to $3,000 from your income, each year until you have used up your losses.
How it works at Double
Double currently tax loss harvests accounts in the Pairs TLH mode and the Direct Index TLH mode. The mode of your account can be seen at the top of your Portfolio page.
While your account is in either of these two modes, we look for TLH opportunities every trading day. We believe that looking for trading opportunities often and trading is the opportunity is good enough, is the best strategy out there. This article from JPM helps explain why a continuous approach is best for optimal TLH performance.
For more information about Pairs TLH Mode, see this article.
For more information about Direct Index TLH Mode, see this article.