Selling Shares before Year End for Tax Reasons..

[ronaldo]

I've some shares that were purchased last month. I also had to pay a (quite large) Capital Gains Tax bill at the end of October (after a house sale).

Three of my share purchases are now showing losses of between 1% and 3%. Although the amounts are quite small, if they were to increase in the next 2 weeks, I would consider selling the losers.

Would I be correct in saying that, if I were to sell my losing shares prior to the year-end, I would be entitled to a refund of a small portion of the capital gains tax that I've already paid this year?

 

[cancan]

As far as i know this is true.
Still unless the amount of losses are big enough to offset much of the gain, it may not be worth your while.
You can wait and off set any gain in some other year when it may be worthwhile.

If you think those new shares are going to tank, you may as well gain something from them. If you think they will rise, not worth it loosing out on the profit for a small tax gain.

 

[Janman07]

I'm sorry, did you say losses of 1% to 3%??

Why would you consider selling shares which have not lost any value? The bid/offer spread, commissions and stamp duty (if any) would result in at least doubling your losses.

Now if you had bought Irish Bank Shares in 2006/2007 you would have serious losses which you could realise to offset your capital gain.

You can carry losses forward, by the way, but not gains.

 

[ronaldo]

All my shares are US shares. Therefore, there will be no stamp duty. I'm with a very cheap broker where the commission for selling will be $1 per transaction.

Sorry, my 1 - 3% loss figure is in US dollars. With the dollar now very weak, I've worked out my losses (when converted back to Euros) for my worst performing shares to be up to 18%:

Gain €... Potential Tax Rebate
(208.78).. 41.76
(144.98).. 29.00
(137.68).. 27.54
(138.57).. 27.71
(91.01).. .18.20
(84.02).. .16.80
(21.89).. ...4.38
(17.20).. ...3.44
(2.28).. .....0.46

Therefore, as I have paid a substantial capital gains this year already and I will not be able to get any rebate of any of this unless I suffer a capital loss this year, I think I'll probably sell the six worst performers from above.

At the current rate, this should mean that I'll get a tax refund of about 160 euro. Whilst it's true that these shares could rise in value, I should be able to select another few shares that should perform equally as well (and I'll have an extra 160 to kickstart them).