Most brokerages sell your oldest shares by default. That invisible setting can cost you thousands in taxes.
Here’s a simple scenario:
You need $20K for house downpayment, so you log in and sell 100 shares. Done.
What most people don’t realize: by default, your brokerage likely sells your oldest, cheapest shares. That choice matters for taxes.
Example:
I hold 300 shares of Amazon (current price $210).
If I let the brokerage sell my oldest lot(bought at $180) → $3,000 capital gain → ~$900 tax bill (30% rate).
If I instead specify a different lot(bought at $230) → $2,000 loss → can offset gains or income → ~$600 tax savings.
Same 100 shares sold. A $1,500 swing in taxes.
This isn’t about trading strategies. It’s just about being intentional with which tax lots you sell. Most investors don’t even know they have that choice.
I only discovered this last year, and it surprised me enough that I built a tool, ProfiTree- to help track and optimize these decisions.
Curious if others here have run into the same issue. Do you actively choose tax lots when selling, or just let the default ride?
Here’s a simple scenario: You need $20K for house downpayment, so you log in and sell 100 shares. Done.
What most people don’t realize: by default, your brokerage likely sells your oldest, cheapest shares. That choice matters for taxes.
Example:
I hold 300 shares of Amazon (current price $210).
If I let the brokerage sell my oldest lot(bought at $180) → $3,000 capital gain → ~$900 tax bill (30% rate).
If I instead specify a different lot(bought at $230) → $2,000 loss → can offset gains or income → ~$600 tax savings.
Same 100 shares sold. A $1,500 swing in taxes.
This isn’t about trading strategies. It’s just about being intentional with which tax lots you sell. Most investors don’t even know they have that choice.
I only discovered this last year, and it surprised me enough that I built a tool, ProfiTree- to help track and optimize these decisions.
Curious if others here have run into the same issue. Do you actively choose tax lots when selling, or just let the default ride?