To Minimize Taxes Resist Trades that Feel Good
One of the most wonderful feelings is selling a recently purchased asset that has risen in price. One of the worst feelings is selling a recently acquired asset that has fallen in price. So many investors sell stocks that rise and hold on to the losers. In so doing they are realizing short-term capital gains and deferring long-term capital losses. The result is paying high taxes now and receiving little if any tax benefit from realizing losses.
As painful as it is in the short run, investors can usually lower their long term taxes by selling stocks that have fallen in value while the losses are still short term, and holding on to stocks that have risen in value until they are eligible for the reduced taxation of long term gains. Better yet, borrow against the stocks, deduct the margin interest against investment income and pass the stocks through your estate so that no taxes will ever be paid on the gains.
Biltmore Capital Advisors is NOT an accounting firm. For specific advice regarding taxes, please consult your tax advisor.