Schweser reading 9, concept checker 28 has the below: Taxes on full gain = 24,000 Taxes with tax harvesting = 9,000 Recognition of the capital loss therefore has tax savings of = 24,000 - 9,000 = 15,000 Tax loss harvesting changes the pattern of tax payments (i.e the payments ar pushed further into the future). However, if the stock is sold in the current year, the tax savings of 15,000 can be immediately reinvested and earn the prevailing return. How can the tax savings be reinvested? You don’t actually get the 15,000, isn’t it only a reduction in taxes and not money you receive?
It’s the same thing - if you have to pay 24,000 in taxes you pay well…24,000. If you only have to pay say 9,000 in taxes then you have 15,000 extra to reinvest.
Remember you pay taxes with cash - you would have had to have had 24,000 sat there in cash to pay your tax bill… so anything you don’t pay in taxes can be seen as leftover cash, with which you are able to do what you like…eg. reinvest.
It’s not money you recieve, it’s less money you pay.