Tax-Smart Strategies for Capital Gains in 2023

Using 1031 exchanges and qualified opportunity zones to reinvest the proceeds from the sale of an appreciated asset can defer and sometimes eliminate capital gains taxes. Experienced and successful investors know that their investment wealth faces two powerful enemies at all times: bad investments and capital gains taxes. Invest long enough, and you will inevitably encounter an investment that could have, would have, should have — but didn’t — appreciate in value. Even Warren Buffett has picked the occasional clunker in his long and legendary career, but by cutting losers short, letting winners run, and paying close attention to position sizing and diversification principles, no investor needs to be crippled by any bad investment. The other enemy is a stealth opponent, one that chips away steadily at even the best investors: capital gains taxes, which can siphon off up to 23.8% of the gain for investments held more than a year and as much as 40.8% for investments held for less than a year. (That’s just the federal tax — 41 states also levy their own capital gains tax, which adds an average of an additional 5% to the tax bill and can range much higher in certain states.) READ FULL ARTICLE >>