If you hold highly appreciated assets, timing your sale strategically can significantly reduce your capital gains tax burden. By aiming for long-term gains instead of short-term ones, you can benefit from more favorable tax rates, with long-term capital gains taxed at 15% or 20%, depending on your income bracket, as opposed to short-term gains, which can be taxed as high as 37%. Additionally, harvesting losses can help offset your gains, allowing you to deduct up to $3,000 in losses annually. Being mindful of your tax bracket is crucial, as delaying the sale of assets until you’re in a lower income bracket could lead to substantial savings. For those focused on legacy planning, passing on assets to heirs can offer tax advantages through the “step-up in basis,” which resets the asset’s cost basis to its current market value at the time of your death, potentially reducing capital gains taxes for your heirs. Deferred Sales Trusts offer another strategy, allowing you to defer taxes by selling assets to a trust, which then sells the investment and reinvests or distributes the proceeds over time. Working with a qualified professional ensures you tailor these strategies to your specific situation, maximizing your investment returns while minimizing taxes.
source: https://capitalgainstaxsolutions.com/timing-is-everything-strategies-for-minimizing-taxes/
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