Can you offset home sale capital gains with short term capital losses from stocks?

[Anonymous]

I have sold my primary residence and an investment property and after the adjusted basis and deductions I will owe capital gains taxes on the properties.  My understanding is you can offset the capital gains with losses whether it is short or long term from any other investments.    For example, if I needed to pay 50k in capital gains then could you invest in some risky stocks and if up, keep the stocks, but if down, just sell when you hit close to 50k to offset the real estate gains?  I know there is a 30 day rule for reinvesting in stocks but was curious about the capital gains side and if so are there any downsides to doing that?

[Mike9241]

yes. capital gains and losses are reported on the sane form so losses and gains are netted. first short-tetm items are netted. next long term items are netted. if one type is a loss and the other type is a gain they are netted. generally you are allowed to take a net capital losss of up to $3000 each year.

the downside. we don't know your tax situation. if your long-term gains and other inome are low enough there is $0 federal tax on the long-term gain.   therefore, taking short-term losses might not have a sigibifcant effect on your taxes for the year of the house sale. Becuase many other items affect your taxes, the only way to know for sure what the tax benefit, if any would be, for taking the short-tem losses is to do an actual tax calculation/projection 

[Anonymous]

Thanks for confirming.  I would fall within the 15% rate so could likely invest in stocks if I wanted to without much risk considering it would offset the gains.  Probably not the best approach to investing but it seems like no for a stock investment until the end of the year.

Does TurboTax have any tax projections?  When checking I didn't see anything for this tax year.

[NCperson]

@Anonymous but remember, paying taxes is a 'good problem' - it means you made money.  I wouldn't suggest investing with the goal of losing $50k so that you don't owe taxes..... that is "the tail wagging the dog'.  

[Anonymous]

I guess the way I am looking at it is not intending to lose money but essentially a very low risk point to invest in the stock market.  If I invest and am up great as that is the intent, but if I am down I can sell at a loss to offset the gains I have to pay regardless..

[Anonymous]

Yes I think it will make sense to just pay the tax as I believe I misunderstood netting the gains.  For example if  gains on real estate would be 100k (accounting for deductions/adjusted basis), the total gain tax would be 20k (15% federal + 4-5% state). A 20k stock loss would not eliminate that gains tax but make my net gains 80k, reducing the tax to 16k, essentially reducing my tax by 4k while losing 20k.