Ways to reduce your 2008 taxes – Use your capital losses

Under the tax rules, you can use your 2008 capital losses to reduce the current year's taxes on your capital gains. In addition, you may be able to carry your 2008 capital losses back to 2005, 2006 and 2007, and use it to reduce your capital gains in any of these years.

Many taxpayers also sell their investment losses before the end of the year when they have realized significant gains earlier in the year. This strategy is particularly interesting in the present economic context. But be careful! If, within the thirty days prior to or following the sale of an asset that resulted in a capital loss, you purchase an identical  asset, the superficial loss rules prevent you from claiming a capital loss on an asset you clearly intended to continue holding.

This rule also applies if your spouse or a company  under your control purchases the identical asset.