By Elisabeth Dawson, Founder of Copia Wealth Management & Insurance Services
When people hear the words tax-loss harvesting, their eyes often glaze over. It sounds complicated—maybe even intimidating. But I’m here to tell you that this is one of the smartest, most underutilized strategies available to help you keep more of your wealth, especially during volatile markets.
In my 25+ years working with families and business owners here in San Diego, I’ve seen firsthand how a thoughtful tax-loss harvesting plan can significantly improve long-term financial outcomes. It’s not just about saving money today—it’s about creating tax efficiency for your future retirement income.
Let’s break this down together in a way that’s warm, approachable, and most importantly—actionable.
What Is Tax-Loss Harvesting?
Tax-loss harvesting is the process of selling investments that have experienced a loss to offset gains in other areas of your portfolio. Those losses can also be used to reduce your taxable income—now and into the future.
Imagine you have a stock or fund in your portfolio that’s gone down in value. By strategically selling that position, you can use the loss to offset gains elsewhere—or even up to $3,000 of ordinary income per year. And the best part? Unused losses can be carried forward indefinitely.
This is one of the powerful ways we help our clients in San Diego reduce “phantom taxes”—money you’re paying without realizing you don’t have to. That’s what we call found money at Copia.
Why This Strategy Matters—Especially in San Diego
Living and retiring in a beautiful city like San Diego comes with higher costs. That’s why tax-efficient strategies are non-negotiable if you want to make the most of your wealth. Every dollar you save in taxes is a dollar that can be redirected toward:
- A more confident retirement
- Legacy planning for your family
- Bucket-list goals like travel or charitable giving
Here’s the thing: most people think tax planning only happens in April. But the reality is, the most impactful tax strategies—like tax-loss harvesting—happen before the year ends. It’s a proactive move, not a reactive one.
When Should You Use Tax-Loss Harvesting?
Timing is everything when it comes to harvesting losses. This isn’t a strategy to “time the market,” but it does require careful attention to market movements throughout the year.
Here are a few ideal times to consider harvesting:
📉 During Market Downturns
If the market takes a dip and you’re holding investments that are now worth less than what you paid, this is the perfect time to consider harvesting that loss.
🧾 Before Year-End Tax Planning
We always review our clients’ portfolios in the last quarter of the year to identify potential losses that can be used to offset gains—before tax season rolls around.
🔄 When Rebalancing Your Portfolio
If it’s time to shift your investment mix, you might as well use that opportunity to harvest any existing losses and redeploy into similar—but not identical—holdings.
What About the Wash-Sale Rule?
You might be wondering: Can’t I just sell a losing investment and buy it right back to maintain my portfolio’s position?
Not so fast.
The IRS has a rule called the wash-sale rule, which says that if you sell a security at a loss and then buy the same or “substantially identical” security within 30 days before or after the sale, you can’t claim the loss on your taxes.
This is why working with a fiduciary financial advisor is so important. We help our clients reinvest in similar—but not identical—positions that preserve the intent of the portfolio without violating IRS rules.
Tax-Loss Harvesting and Retirement Planning
If you’re within 10 years of retirement—or already there—tax-loss harvesting can play a big role in how you withdraw income efficiently.
It Can Offset Roth Conversions
Thinking about converting some of your IRA into a Roth? Tax-loss harvesting can help reduce the tax bill you’d owe on that conversion.
It Can Reduce Capital Gains from Rebalancing
As we adjust your asset allocation in preparation for retirement, you may realize gains. Losses harvested from other parts of your portfolio can help cushion the blow.
It Can Improve After-Tax Returns
Every dollar you don’t pay in taxes is a dollar that continues to work for you through compounding growth. That’s the real magic.
A Real-Life San Diego Example
Let me give you a simplified story of one of my long-time San Diego clients—we’ll call him Mark.
Mark is a 58-year-old business owner preparing for retirement at 65. He came to us with a strong portfolio, but he was concerned about tax exposure during retirement. We reviewed his taxable investment account and found several positions that had dipped below their purchase price during a recent market downturn.
By harvesting those losses, we were able to offset over $25,000 in capital gains from earlier that year. Not only did this reduce his tax bill, but we reinvested the proceeds in similar ETFs to keep his portfolio aligned with his goals.
Now, those unused losses are carried forward and can help offset future gains—even years from now. That’s smart planning, not guesswork.
How to Start Using This Strategy
If tax-loss harvesting sounds like something that could benefit you—and trust me, for many it can—here are some next steps:
✅ Step 1: Review Your Portfolio Regularly
Don’t wait for your CPA to flag opportunities. This is where your advisor should be proactive.
✅ Step 2: Track Cost Basis
You need to know what you paid for each investment and how it’s performed over time. Most custodians track this, but we double-check it for accuracy.
✅ Step 3: Don’t Go It Alone
Tax-loss harvesting isn’t a “DIY” job. There are moving parts, timing rules, and tax consequences. As fiduciaries, we coordinate with your CPA to ensure everything works together seamlessly.
Is Tax-Loss Harvesting Right for You?
Not everyone needs to use this strategy. If all your investments are in tax-deferred accounts like IRAs or 401(k)s, this won’t apply. But if you have a taxable brokerage account—which many high-net-worth individuals and business owners do—then tax-loss harvesting should absolutely be part of your annual financial review.
It’s one of those strategies that, when done consistently over time, can quietly but significantly increase your after-tax wealth.
Let’s Talk About Your Next Move
I know tax topics can feel overwhelming, especially when you’re already juggling work, family, and future planning. But that’s why I do what I do. My mission has always been to help you gain clarity and confidence with your money—and tax-loss harvesting is just one of many tools we use to make that happen.
If you’re curious whether this strategy could benefit you, I invite you to schedule a complimentary consultation. Let’s review your current investments, run a personalized tax-efficiency analysis, and uncover what opportunities might be hiding in plain sight.
Let’s put every dollar you’ve worked so hard for to its highest and best use.
Schedule your strategy session today and let’s talk about how tax-loss harvesting could work for you.
Because when it comes to your retirement, you deserve a plan as extraordinary as the life you’ve built.
Warmly,
Elisabeth Dawson
Founder, Copia Wealth Management & Insurance Services
📍San Diego, CA
CA LIC #0C71264, #0G81294
Investment advice offered through Copia Wealth Management Advisors, Inc.
Copia Wealth Management Advisors, Inc. is a registered investment advisor.
