Capital losses can only be
applied against capital gains.
In such a case, capital losses are first
applied against capital gains of the same type to reduce such gains.
Adding insult to injury, the puny effective tax saving to those tax - filers from the capital gains partial inclusion (worth $ 7.50 in federal taxes at the 15 % marginal rate) was only half the effective savings pocketed by the top 1 % tax - filers (realized at a 29 % rate) on EACH $ 100 of their capital gains partial inclusion (which was then
applied against a capital gains flow that was 600 times larger).
Not exact matches
Outside RRSPs or TFSAs, such an action might generate
capital gains taxes or — depending when it was bought — some
capital losses that could be
applied against previously booked or future
capital gains.
And to the extent you can combine rebalancing with any tax - related moves, such as selling off shares of poor performers to generate realized
capital losses that can be
applied against realized
capital gains or even ordinary income, so much the better.
To the extent there are any tax deductions, those deductions are
applied to the ordinary income first, and only
apply against long - term
capital gains directly once ordinary income has been reduced to zero.
If you're sitting on unrealized
capital losses in investments in taxable accounts, you may want to consider selling shares before the end of the year to realize the loss and
apply it
against realized
capital gains in other investments (including mutual funds, which are expected to make sizable distributions this year).
And notably, because deductions are
applied against ordinary income first and
capital gains second, someone with high total income due to
capital gains could still be eligible for low tax rates on a partial Roth conversion (although this can still phase out the benefits of 0 % long - term
capital gains tax rates), and / or have their deductions
apply favorably to shelter further partial Roth conversions.