Turn Market Losses into Tax Wins: Smart Year-End Harvesting Strategies

Turning Volatility into Opportunity

At Aligned Wealth Advisors, our approach is straightforward: get clear on where every dollar is allocated and when, align deductions with strategy rather than habit, and coordinate across individuals, entities, and states so your plan actually holds up.

And when markets turn rough, that clarity becomes a competitive advantage. Because while volatility can rattle portfolios, it also opens the door to one of the smartest, most underused tax moves available to investors — tax-loss harvesting.

As the year winds down, this strategy can help transform temporary paper losses into long-term tax wins — reducing what you owe while positioning your portfolio for future growth.

Understanding Tax-Loss Harvesting

Tax-loss harvesting is the process of selling investments that have declined in value to offset capital gains elsewhere in your portfolio.

Here’s how it works in practice:

• You sell a security that’s currently trading below your purchase price.
  
• That realized loss offsets capital gains from other investments.
  
• If your losses exceed your gains, you can use up to $3,000 of that net loss to offset ordinary income — and carry the rest forward to future years.

In short, you’re turning market declines into a source of tax efficiency — lowering your liability today while keeping your capital working for tomorrow.

Why It Matters Before December 31

Timing is everything.

Losses and gains only count for the year in which you realize them — meaning you have until December 31 to lock in harvesting opportunities for this tax cycle. Too often, investors wait until tax filing season to think about tax strategy. By then, it’s too late to take meaningful action. Smart investors — and smart advisors — treat tax planning as a year-round strategy, not a reaction to April’s paperwork.

Three Smart Moves to Maximize the Benefit

1. Review for Strategic, Not Emotional, Selling

Harvesting isn’t panic-selling — it’s precision-selling.
Before making any moves, assess your portfolio’s unrealized gains and losses, along with your overall tax picture.

At Aligned Wealth Advisors, we coordinate these reviews with your CPA and estate team to ensure every decision aligns across your entire financial structure — individuals, trusts, and entities.

The goal is to reduce exposure without disrupting your investment plan.

2. Mind the “Wash-Sale” Rule

The IRS “wash-sale” rule disallows a deduction if you repurchase the same or a “substantially identical” security within 30 days before or after the sale.

To stay compliant while keeping your market exposure, consider buying a similar — but not identical — asset during that period.
For example, if you sell one large-cap index fund at a loss, you could buy another that tracks a slightly different index.

This lets your strategy stay invested while still capturing the deduction.

3. Reinvest with Purpose

Harvesting creates an opportunity to restructure your portfolio intelligently — not just tactically.

You might:

• Realign toward higher-quality, dividend-paying equities.
  
• Adjust bond exposure to reflect rate trends.

Add tax-efficient ETFs or municipal bonds to reduce future drag.

Think of tax-loss harvesting not just as a defensive move, but as a reset moment — one that refines your positioning going into the new year.

Case in Point: Turning a Loss into Long-Term Leverage

Imagine an investor who realized $50,000 in capital gains from stock sales earlier in the year. In the current market, a few holdings have declined by $30,000. By realizing those losses before December 31, they can offset $30,000 of gains — trimming their taxable income significantly.



And if additional losses remain, they can roll forward for use in future years.

The market may have delivered volatility — but the investor walked away with measurable savings and a cleaner, more tax-efficient portfolio.

Beyond Harvesting: Coordinated Tax Strategy

Tax-loss harvesting is just one lever in a broader, integrated plan. The real power comes when tax, investment, and entity planning all speak the same language.

At Aligned Wealth Advisors, we ensure these strategies work together — coordinating across personal portfolios, business entities, and state filings. Whether it’s optimizing charitable deductions, accelerating depreciation, or timing capital gains, we focus on the total picture of wealth alignment, not just the numbers on a statement.

Stay Proactive — Not Reactive

Markets move fast. Opportunities to harvest losses — or to reinvest strategically — can vanish just as quickly. That’s why proactive planning is critical.



By reviewing your portfolio before December 31, you’re not just reacting to volatility; you’re using it. You’re converting temporary losses into permanent tax advantages — and positioning yourself for stronger compounding when the markets rebound.

Closing Thought: Volatility Rewards the Prepared

Market downturns don’t have to feel like setbacks. With the right guidance, they can become tools for progress.



At Aligned Wealth Advisors, we believe volatility rewards those who plan ahead — not those who panic. By applying year-end tax-loss harvesting as part of a coordinated, strategic approach, you can protect your capital, optimize your taxes, and start the next year already a step ahead.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).