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Avoiding capital gains taxes when reallocating portfolio
Posted on 7/9/14 at 7:53 am
Posted on 7/9/14 at 7:53 am
I have big gains in all of my taxable portfolio positions. I want to move from some high/moderate risk investments to lower risk ones, but will get hammered by taxes if I sell.
Forbes article says following:
' Stock exchange. Stock investors with highly appreciated securities can also do a like-kind exchange. Certain services offer investors with one highly appreciated security a way to trade it for an equivalently valued but more diversified portfolio.'
Anyone have any idea what they're talking about? I've always understood that 1031 exchanges, for example, are not allowed for stocks.
Forbes article says following:
' Stock exchange. Stock investors with highly appreciated securities can also do a like-kind exchange. Certain services offer investors with one highly appreciated security a way to trade it for an equivalently valued but more diversified portfolio.'
Anyone have any idea what they're talking about? I've always understood that 1031 exchanges, for example, are not allowed for stocks.
5
Posted on 7/9/14 at 8:14 am to Ole War Skule
Not sure what that article is talking about. 1031 exchanges don't apply to stocks or bonds. I'm not aware of any exchanges you could do with stocks to avoid capital gains taxes, unless you have some holdings with losses you could sell at the same time to offset some of the gains.
Even if you could do a 1031 exchange the gain is deferred to a later time, so you'll be paying taxes on it at some point either way.
Even if you could do a 1031 exchange the gain is deferred to a later time, so you'll be paying taxes on it at some point either way.
Posted on 7/9/14 at 8:18 am to Ole War Skule
I have not heard of such a thing for stocks.
There are some things you might do I suppose. You might buy puts on the stocks in your taxable account and then margin the stocks to raise the cash to buy lower risk investments. The danger there would be if the market fell you would have a profit on your puts that might be taxed as ordinary income.
I think we are basically screwed by capital gains taxes.
They are unfair.
There are some things you might do I suppose. You might buy puts on the stocks in your taxable account and then margin the stocks to raise the cash to buy lower risk investments. The danger there would be if the market fell you would have a profit on your puts that might be taxed as ordinary income.
I think we are basically screwed by capital gains taxes.
They are unfair.
Posted on 7/9/14 at 8:27 am to Ole War Skule
Have you held them long enough for them to be considered long term capital gains?
If not consider buying puts to protect yourself on downside. That brings a tax liability on the puts if things go down, but if done properly would be better than the ~20% difference between long and short term capital gains.
If not consider buying puts to protect yourself on downside. That brings a tax liability on the puts if things go down, but if done properly would be better than the ~20% difference between long and short term capital gains.
Posted on 7/9/14 at 9:58 am to Ole War Skule
I've never heard of a like kind exchange for a stock portfolio.
Each stock purchase and sale is a seperate economic event. When you sell an appreciated stock, you made money on it, actual cash money, and you have to pay the taxes on that.
Do you have any loss posistions you can sell in the same year?
Each stock purchase and sale is a seperate economic event. When you sell an appreciated stock, you made money on it, actual cash money, and you have to pay the taxes on that.
Do you have any loss posistions you can sell in the same year?
Posted on 7/9/14 at 11:19 am to Ole War Skule
Tangent, but this is another reason why I dislike using stocks instead of mutual funds for diversification: reallocation headaches.
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