Heliostar Metals Ltd V.HSTR

Tax-Loss Selling

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Tax-Loss Selling

If you initially sold the shares to take a loss on the stock for tax purposes, take care on the timing of the repurchase. Losses from sold stock shares can be used to reduce your income taxes from other investments or income. The tax rules do not allow an investor to sell shares to take a loss and then immediately buy back the shares. This tactic is called a wash sale and the loss will be disallowed if the investor tries to claim the loss for tax purposes.

 

Avoiding a Wash Sale

To avoid having the loss from a stock sale disallowed due to the wash-sale rule, do not buy shares of the same stock in the period 30 days after and before the sale date of the stock. To sell a stock for a loss and take the loss as a tax deduction, an investor must wait at least the 30 days beforebuying the shares again. The part of the rule that disallows buying the stock 30 days before selling prevents an investor from trying to trick the Internal Revenue Service by buying the shares before selling the held shares for a tax loss.