Share A: Unrealised loss: €30k. I sell just enough to realise a loss of €10k to offset my CGT liability to zero
I have many other share in my portfolio with unrealised gains & unrealised losses in them.
Yes I have done this, however usually what happens is that stocks that have been doing badly beforehand sell off even more now as many people do the same thing, its called tax loss harvesting, then towards the end of december (unless its a bear market) those stocks will rise alot as those people buy back in again. Sometimes its not a stock specific issue but sectoral so a way around this is to sell your stock and immediately buy another similar stock also suffering from sector wide woes. for example bank of Ireland and AIB you sell BOI and buy AIB, of course this is not exact as company specific factors outweigh the overall sectorAnyone else practicing this? Any reservations or pitfalls? Thanks for any insights on such a practice.
sell off even more now as many people do the same thing,
It applies more to the huge stocks that sell internationally, for example energy like it was 3 years ago could be in a massive recession therefore all energy stocks are suffering, therefore you sell one energy stock and buy another one, but the tax issue doesn't over ride the sectoral issue. As regards AIB and BOI I would say the sectoral issues effecting the banking sector overall and obviously the financial crash and heavy government involvement subsequently had alot bigger effect than the individual bank factors. If BOI is falling alot so is AIB and vica versa, its rarely the case that BOI is flying high and AIB is tanking, they normally move in stepReally?
Unless it's a very illiquid stock, I can't imagine that private investors selling to realise CGT losses would impact the share price much.
But if BoI and AIB are suffering from sector wide woes, surely investors in AIB will also be selling so would be suffering from the same alleged effect.
If AIB were doing well and BoI were suffering, it might make sense to sell BoI and buy AIB. But I doubt it.
Brendan
Any reservations or pitfalls?
I like that thinking. Cheers.Yes I have done this, however usually what happens is that stocks that have been doing badly beforehand sell off even more now as many people do the same thing, its called tax loss harvesting, then towards the end of december (unless its a bear market) those stocks will rise alot as those people buy back in again. Sometimes its not a stock specific issue but sectoral so a way around this is to sell your stock and immediately buy another similar stock also suffering from sector wide woes. for example bank of Ireland and AIB you sell BOI and buy AIB, of course this is not exact as company specific factors outweigh the overall sector
Penny just dropped. You’re right.No that’s not what I meant. Which makes me think I am missing a trick here.
I think I may have written it incorrectly above.
Take 2…
Realized gains this year: €30k.
Therefore CGT due €10k.
Share A: Unrealised loss: €30k. I sell just enough to realise an actual loss of €10k to offset my CGT liability to zero.
Right? Or?
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