The tax consequences of the sale of an investment, as well as
your net return, can be affected by a variety of factors. You’re probably
focused on factors such as how much you paid for the investment vs. how much
you’re selling it for, whether you held the investment long-term (more than one
year) and the tax rate that will apply.
But there are additional details you should pay attention to. If
you don’t, the tax consequences of a sale may be different from what you
expect. Here are a few details to consider when selling an investment:
Which shares you’re selling. If you
bought the same security at different times and prices and want to sell
high-tax-basis shares to reduce gain or increase a loss to offset other gains,
be sure to specifically identify which block of shares is being sold.
Trade date vs. settlement date. When it
gets close to year end, keep in mind that the trade date, not the settlement
date, of publicly traded securities determines the year in which you recognize
the gain or loss.
Transaction costs. While
transaction costs, such as broker fees, aren’t taxes, like taxes they can have
a significant impact on your net returns, especially over time, because they
also reduce the amount of money you have available to invest.
If you have questions about the potential tax impact of an
investment sale you’re considering — or all of the details you should keep in
mind to minimize it — please contact us.
© 2017
No comments:
Post a Comment