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Here’s how to harvest 0% capital gains amid the latest stock market rally
During a strong year for the stock market, a lesser-known strategy could help rebalance your portfolio and save on future taxes.
The tactic, known as tax-gain harvesting, involves strategically selling your profitable brokerage account assets during lower-income years. That could include early years of retirement or periods of unemployment.
As of Aug. 26, the S&P 500 has surged more than 18% year to date, with strong growth in August as investors brace for interest rate cuts from the Federal Reserve in September.
“A lot of times when we’re doing this, we’re looking to realize those gains at 0%,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
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The capital gains brackets apply to long-term capital gains, or profitable assets owned for over a year. By comparison, short-term investments held for one year or less are subject to regular income taxes.
“It’s very lucrative, especially if you’re married” and filing together, Lucas said.
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