Tax-loss harvesting is the act of selling an investment with a depreciated value to generate a loss and then investing the gain back into a similar asset to stay invested in the market. The largest exception is not to use the wash-sale rule, which disallows losses on the purchase of the same or substantially similar investment within 30 days before or after sale. The investors usually invest in ETFs or other funds in order to be invested but stay in compliance. The taxable brokerage accounts are best in the strategy, rather than retirement accounts. Tax-loss harvesting enhances the after tax performance of investment in the long term by reducing taxable gains and carrying forward excess losses.