Tutorial: Tax at Sale
One of the most requested features has been the Tax at Sale feature, showing you expected taxes for individual securities across your portfolio. Here is a short overview of how to use it, and how it works behind the scenes.
Note: this feature is currently only available to Canadian users who have linked accounts. If you live in the US and are really excited about using this feature, reach out to firstname.lastname@example.org to join a beta as soon as it becomes available.
Tax at Sale
To find the relevant tax information for your portfolio, go to the Details page to view details about your portfolio at a portfolio and account level. As part of healthy portfolio management, you should be considering the tax implications of every trade. The "Tax at Sale" column shows the estimated tax that you would pay (or be credited, if negative) if you were to sell the entire security today.
In the background, Tax at Sale is calculated by taking your marginal tax rate and multiplying it by the gains for any particular security. The marginal tax rate is calculated using your residency and income information, whereas the security's gains are calculated using the original purchase price and today's market price. It is not perfect, but a fairly good approximation of the expected tax to be owed.
If a value is negative it means that the security has lost value since purchase, meaning that you would accrue a tax credit if sold. This could be useful if you were to take advantage of tax loss harvesting strategies (explained further below).
Tax Loss Harvesting
At the end of every calendar year, it is worth looking at your portfolio and determining if there is an opportunity to reduce your tax burden through tax loss harvesting. If you have portfolio gains that you are expected to pay tax on, you could look to see if there are any "losers" in your portfolio that you could sell to offset the gains through the use of tax credits. If you want to keep your strategy/position of your portfolio holistically, you could simply swap one security for another in order to keep your portfolio exposure consistent, but book the loss (e.g. swap VOO for SPY).