Wiser Wealth: With Taxes on Capital Gains Expected to Increase What Should You Do to Prepare?


With it looking likely that the government will be increasing taxes on capital gains, it has quite a few people questioning what they should do to get the most out of their investments.

Would it be better to sell off those investments now rather than wait and have to pay significantly more in taxes? Some people are considering that, but it might not be the best option.

Marie Sapirie of Forbes explains, saying how one option is to just wait and see as the process is still slowly developing. However, for investors who want to be more proactive, some have utilized qualified opportunity fund investments.

This allows investors to put money into a fund that takes some out for charitable purposes each year, but also acquires interest. Whenever the investor arranged for the fund to end, they could then get the remainder of the fund plus any interest on a tax break. However, this method requires the fund to be active for years for this to be applicable.

The reality is, people who find themselves on the wrong side of the proposed new income threshold for higher taxes could wind up paying big when it comes time for them to do something like sell a business.

People who are barely over that income threshold question whether it may even just be worth deliberately lowering their income to avoid losing even more from how significant the taxes could be.

Sapirie suggests that this might just be a good time to look at rebalancing your portfolio to help the situation. While this generally wouldn’t be of great benefit since it would have minimal tax incentives, in this case it could help avoid the steep increase.

It’s difficult to say which route is best as it still remains to be seen how the government intends to handle this. But what is clear is that it is definitely time to start examining your options so you can be prepared for when the time comes.

For more information about capital gains rate and how it can impact your taxes, read the article from Forbes here.


Fred Hubner

Want to know if you’re on the right path financially? Fred Hubler’s Second Opinion Service (SOS) is a no-obligation review with Creative Capital Wealth Management Group‘s Chief Wealth Strategist. It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting.



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