Save More Money with Hood & House, Inc. PC: Maximize Your Investment Returns
If you’re an investor, we’re confident that there are numerous legitimate methods to reduce, defer, or even eliminate costly taxes on your investment gains. Many of these strategies may come as a surprise since they aren’t widely known. Uncle Sam prefers to keep them under wraps, but we’re here to reveal them to you!
Consider the Benefits of
In the United States, investors are only taxed on capital gains when they sell their investments. Consequently, in certain cases, it makes more financial sense to hold onto your assets for the long term to avoid capital gains taxes.
This approach becomes even more advantageous because your intention to hold investments for the long term influences your investment choices. Additionally, you can retain most investments indefinitely and continually defer taxes on gains, subject to specific circumstances.
Explore the Advantages of Long-Term Capital Gains Rates
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Dive into Asset Location Strategies
Typically, you’ll be taxed on dividends and cash distributions in the year you receive them, which can limit your options for reducing taxes. However, the location where your assets are held can significantly impact your tax obligations. Utilizing certain strategies, such as an Individual Retirement Account (IRA), can allow you to postpone paying capital gains taxes. Speaking of IRAs…
Open an IRA for Tax Advantages
Hood & House, Inc. PC offers two types of IRAs: traditional and Roth. With a traditional IRA, you can contribute pre-tax funds, potentially reducing your taxes when combined with the right strategy. Additionally, you have the option to defer taxes on profits.
On the other hand, Roth IRAs operate in reverse. You contribute after-tax money, which is particularly beneficial for retirement accounts. Once you reach the age of 59 ½ (why not simply 59 or 60?), you can make tax-free contributions to your Roth IRA and withdraw funds without incurring taxes.
Leverage the Power of a 1031 Exchange
Ideal for those looking to flip or sell a long-term property, a 1031 exchange allows you to defer your capital gains by reinvesting the proceeds in another investment property. However, it’s crucial to navigate the potentially confusing rules associated with a 1031 exchange. We recommend seeking guidance from a professional to ensure compliance and enjoy the benefits mentioned above.
Optimize Your Returns with Tax-Loss Harvesting
The IRS permits you to deduct realized investment losses from your gains. This means you’ll only owe taxes on the net capital gains rather than the gross amount. Tax-loss harvesting can be especially valuable during uncertain economic times when risky investments are involved.
Take Action and Achieve Your Financial Goals
While each of these strategies has its unique nuances, they all share a common thread: complex rules that can lead to trouble if misunderstood or mishandled. That’s why it’s crucial to work with experienced professionals who prioritize your financial success and guide you away from potential pitfalls.
Regardless of the professionals you choose to collaborate with, ensure that you consult them before finalizing any investment decisions. Hood & House seasoned tax strategists are here to assist you with expert advice and support.