When you profit from the sale of an investment, you will incur a capital gains tax liability. It’s great that you were able to make money on your investment, but capital gains can be taxed at elevated rates, so many smart investors look for ways to offset paying capital gains taxes on investment proceeds. In today’s blog, we take a closer look at a few ways to offset capital gains.
Smart Moves To Offset Capital Gains
At CPEC1031, we’re always looking for ways to help you keep more of your hard earned money. Here are five smart financial moves you may be able to make in order to reduce your capital gains tax liability.
Consider A 1031 Exchange - We’ll start with a tip we have a wealth of experience with. A 1031 exchange allows you to move all of the funds from the sale of one property into the purchase of another like-kind property without having to pay taxes on the proceeds of the sale. If you are looking to move on from one investment opportunity and into another, a 1031 exchange is a very financially-wise move.
Offset With Losses - Some assets do really well, while you may lose money on others. You can sell other assets at a loss to offset some or all of the capital gains you realized on other assets. This is oftentimes referred to as tax loss harvesting.
Minimize Taxable Income - If you expect to have capital gains this year, you should consider doing what you can to reduce your taxable income. Increasing your contributions to your IRA or 401(k) or reducing your taxable income through other investments like municipal bonds can help to minimize your short-term capital gains rate.
You worked hard for your money, and by taking a few smart steps, you can hang on to more of it by lowering your capital gains tax liability. For more information on navigating capital gains taxes or 1031 exchanges, please give the team at CPEC 1031 a call today at (612) 643-1031.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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