Calendar Alert: When to Execute Tax-Loss Strategies Before Year-End

With 2025 drawing to a close, it’s time to mark important dates on your investment calendar. Tax-loss selling—the practice of strategically liquidating underperforming positions to offset capital gains—requires precise timing. Missing deadlines can mean forfeiting significant tax benefits, so investors across North America need to understand the final windows for executing these strategies.

Critical Deadlines You Cannot Miss

The timeline for tax-loss harvesting varies by jurisdiction. In Canada, mark December 30, 2025 as your absolute final day. This date represents when trades must settle under the country’s T+1 settlement cycle (trades settle one business day after execution). A regulatory shift in May 2024 tightened this window considerably, moving from the previous T+2 framework.

US investors have until December 31, 2025 to execute their tax-loss sales, according to IRS guidelines. This extra day provides a minimal advantage but can matter in fast-moving markets.

For Australian taxpayers, the deadline extends significantly further—June 30, 2026—since it aligns with the Southern Hemisphere’s financial year conclusion (2025/2026 fiscal year).

How Tax-Loss Harvesting Actually Works

The mechanics are straightforward: when an investment declines in value, selling it crystallizes that loss. Because capital losses are tax-deductible, they can directly offset capital gains realized elsewhere in your portfolio, thereby reducing your overall tax liability. The strategy becomes particularly potent during November and December selling pressure, when widespread liquidation creates opportunities.

However, there’s a critical trap: the IRS prohibits “wash sales,” where investors sell losing positions and immediately repurchase identical securities to claim the tax deduction illegally. To stay compliant, you must wait a minimum of 30 days before repurchasing shares sold at a loss. Additionally, positions must have been held for more than 30 days before being sold to qualify.

The Hidden Opportunity in Year-End Selling

While most investors focus on dumping losers for tax purposes, data from Canaccord Genuity Group reveals a counterintuitive pattern. Stocks down more than 15% year-to-date typically underperform the broader index by nearly 4% during the heavy tax-loss selling window (mid-November through mid-December). Yet these same beaten-down securities outperform by 3.6% from mid-December through mid-January.

This rebound effect creates an arbitrage opportunity: investors can buy heavily liquidated positions during peak selling season and capture significant gains as markets recover into the new year.

Timing Your Move: When Professionals Act

Portfolio managers recommend acting decisively during the second and third weeks of December. This window provides adequate runway before the traditional “Santa Claus rally”—the late-month surge in stock prices that typically precedes a stronger January—and allows positions to settle cleanly before year-end reporting.

Liquidity dries up as deadlines approach, so delays can mean worse execution prices. Whether you’re harvesting losses or opportunistically buying oversold assets, December’s middle weeks represent the optimal execution window before holiday-driven market thinness sets in.

The bottom line: consult your tax advisor or financial professional before implementing any strategy. The information provided here is educational and should not substitute for personalized tax advice. Your accountant can help you determine whether tax-loss selling aligns with your specific situation and helps you mark the right moves on your calendar before these critical dates expire.