Tax-loss harvesting isn’t like harvesting corn.

Harvesting corn results in cash. But when a tax loss is harvested, it is replaced by a somewhat similar holding with a newer lower basis.

This means that the harvester is actually just pushing a future gain down the road, a potentially greater gain that will inevitably be taxed at some point.

As Michael Kitces, partner and director of research at Pinnacle Advisory Group in Columbia, Md., says, such deferrals can make sense and even save investors money, but he adds that many advisers “continue to overstate the benefit of tax-loss harvesting” by “confusing tax savings with tax deferral.”

Harvesting tax losses can make sense, for instance by converting a loss into a long-term gain that doesn’t have to be realized or taxed for years later when the taxpayer might be in a lower income bracket. But the process also can add costs, such as transaction fees or the bid-asked spread, he says.

“There is also certainly a question about the optimal frequency for harvesting losses,” Kitces says. “If you only harvest annually, for example, in a volatile market you can miss some great tax loss harvesting opportunities, but if you harvest losses weekly, you can end up doing needless trades with greater transaction costs.”

Kitces’ suggestion for those who use the strategy: “Harvest losses on a quarterly basis.”

However, he warns tax loss harvesting isn’t for everyone.

“Anyone in the 10% to 15% tax rate income bracket has a capital gains rate of zero, so tax loss harvesting doesn’t make sense. At that income level, you should be harvesting gains, not losses, and it’s completely irrelevant for people who only have tax-advantaged portfolios,” Kitces says.

Alex Benke, vice president for financial advice and planning at Betterment, agrees.

“Anyone in the lower tax brackets should not be tax loss harvesting,” he says.

But, “if you’re young and earning less than you will be in the future, you do get to take up to $1,500 per year [$3,000 per couple] in losses and deduct that from your income,” Benke says.

Even in the case of wealthy clients for whom tax loss harvesting would ordinarily be advantageous, “if they have assets all over the place, some not being handled by the adviser, they should avoid tax-loss harvesting,” he says.

“They won’t know what the risks are of running afoul of [Internal Revenue Service] rules against wash sales,” Benke says. “An adviser is responsible for avoiding violating the IRS wash rule for portfolios he manages, but any monitoring of accounts outside the adviser’s control is the responsibility of the client.”

This story is part of a 30-30 series on ways to build a better portfolio.