Tax Tips: Portfolio Rebalancing

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Make a charitable gift to offset capital gains through portfolio rebalancing.


Many sophisticated investors perform routine portfolio rebalancing to ensure that their investment mix is consistent with their goals. Often this involves selling investments that have done well, which generates capital gains taxes in the process.


One simple offsetting measure is aligning your charitable giving with the rebalancing process. Instead of writing a check to your favorite charity this year, consider donating your most highly appreciated security, which you have held for over a year. Capital gains taxes typically will not apply to you or the charity receiving the donation, and, because you didn’t write a check, you may have cash available to purchase more stocks as part of your rebalancing exercise.


Authored By: Vance Roush, CEO/Founder of Overflow


The above references an opinion and is for informational purposes only. It is not intended to replace investment or tax advice. Please seek a duly licensed professional for investing or tax advice.


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