The government wants more of your profits: should you sell before they need to be handed over?

By Andrew Altfest

It’s not unusual at this time of the year for taxes to be on our minds. In fact, you may be asking yourself, “How can I keep my taxes down?”

To help keep tax bills down, the normal course of action is to defer income and the taxes on it for as long as possible. This is true for long-term capital gains. Until you sell an appreciated security and realize a long-term capital gain, in effect there is an opportunity to have an interest-free loan from the government that produces greater wealth as the security appreciates further. Because you are in charge of when to sell a security, you get to choose when the government is paid. However, with the capital gains tax rate scheduled to move from 15% to 20% next year, the question is should a security be sold that would not have normally been sold this year to take advantage of the 15% rate while it’s still here? Read More…