When markets are down, it is a great time to use a tax-loss selling strategy to lighten your future tax burden.

You can sell your securities when at a loss to realize any capital losses. Like capital gains, 50% of net capital losses are eligible as a deduction when filing your tax return.

Capital losses can be used to offset capital gains from the past three years, the current tax year and can be carried forward indefinitely to offset future capital gains.

Before you sell for the purpose of tax-loss harvesting, there are a few things you should consider.

1) If you have a large gain from selling a private company or farm property, $813,600 (as of 2015) qualifies for the lifetime capital gains exemption.

2) Determining if your capital loss is considered 'superficial'. If you sell your investment to trigger a loss and you or your spouse rebuys the same investment 30 days before or after the investment was sold, this loss will be considered superficial, and be denied as a tax deduction.

3) Is the loss from a business investment? Determine if the loss on your investment is an allowable business loss. If it is, it can be used against any source of income in the year claimed.

4) If you are going through a divorce or separation, you can trigger losses when transferring investments to your spouse.