Mark These Tax-loss Selling Dates on Your Calendar

As 2018 comes to a close, investors may want to consider looking at tax-loss selling and how to use the strategy to their benefit.

To review: buying stocks low and selling them high is ideal, but sometimes investments go sour. In such cases all hope is not lost — investors have the option to “sell shares held in a non-registered account that have dropped in value, thus incurring a loss when sold.” They can then use the money to “offset other capital gains incurred throughout that year.” This is the principle behind tax-loss selling.

For example, if an investor bought 1,000 shares of a company for $53 each, they could sell the shares and take a loss of $3,000 in the event that they declined in value to $50 each. The $3,000 loss from the sale could then be used to offset gains elsewhere in the investor’s portfolio.

As the Globe and Mail states in a recent article on the subject, tax-loss selling is essentially a way for investors to “reduce their tax bill.” For more experienced investors, it can also be a way to reap the benefits of a reduced tax bill, then enjoy future gains by buying back jettisoned stocks at a later date, when they’re on the rise again.

Save the date for tax-loss selling

Tax-loss selling comes with many potential benefits, but it nevertheless has some strings attached. The key thing for investors to remember is that it has a deadline.

For both Canada and the US, the last day for tax-loss selling in 2018 is December 27; however, investors should remember to make any trades at least two to three days ahead of time so there’s time to process them. Investors still hoping to take advantage of this strategy will have to make their trades soon, as the deadline is less than a month away now.

The flip side of tax-loss selling

On the flip side, investors should be aware that as tax-loss selling gets underway, opportunities also tend to open up for investors who have spent the year on the sidelines.

In her piece “How Bout Tax Loss Buying?,” Gwen Preston, publisher of the Resource Maven newsletter, explains that Canaccord Genuity has found that from mid-November to mid-December, S&P/TSX Composite Index (INDEXTSI:OSPTX) stocks down more than 15 percent year-to-date underperform the index by nearly 4 percent. However, from mid-December to mid-January, those same stocks outperform the index by 3.6 percent.

Click here to continue reading...

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

Part of the Stock Digest family of websites

Small Cap Stock Digest



Name Last Change
DOW 25490.50 1.12%
S&P 500 2822.24 1.21%
NASDAQ 7628.28 1.61%
TSX 16164.61 1.01%
TSX-V 602.02 0.00%

Resource Commodities

Name Last Change
Gold 1281.94 0.00%
Silver 14.59 0.00
Copper 2.68 2.681
Platinum 901.00 0.67%
Oil 61.42 2.78%
Natural Gas 2.54 2.75%
Uranium 24.25 1.34%
Zinc 1.20 0