Capital Gains Season: What to Know Before You Sell 💰📉

As we head into the final stretch of the year, many investors start eyeing their portfolios and wondering: Should I sell now or wait until next year? Whether you're holding individual stocks, ETFs, or company equity, timing your sale right can mean the difference between a smart tax strategy and a surprise tax bill. Here's how to stay ahead of the curve and keep more of your gains in your pocket.

Understand the Tax Basics First

Let’s start simple: when you sell an investment for more than you paid, that profit is a capital gain. But not all capital gains are created equal.

• Short-term capital gains (held less than one year) are taxed at your ordinary income tax rate. This could be as high as 37%!

• Long-term capital gains (held over one year) are taxed more favorably—usually 15% or 20% depending on your income.

Pro tip: Waiting just one more day past the 1-year mark before selling could cut your tax rate in half.

Timing Is Everything

The IRS doesn’t care why you sold—just when. Selling on December 30th vs. January 2nd could push your tax bill into an entirely different year.

Here’s what to consider:

• Need the cash now? You might have no choice but to sell in Q4—but know it may impact your 2024 tax return.

• Expecting lower income next year? Delaying your sale to January could reduce your capital gains tax rate.

If you're on the edge of a tax bracket, a few thousand dollars in extra income could nudge you into a higher rate.

Offset Gains With Losses (Legally!)

If you’ve had some losing investments this year (hey, we’ve all been there), you might be able to use those to your advantage.

This strategy is called tax-loss harvesting:

• Sell underperforming assets at a loss.

• Use those losses to offset gains from other sales.

• If losses exceed gains, you can deduct up to $3,000 from your ordinary income and carry the rest forward.

  
  

But beware the wash-sale rule: If you buy back a “substantially identical” security within 30 days, your loss deduction is disallowed.

Talk to Your Tax Pro Before Hitting Sell

One of the biggest mistakes investors make is selling first and asking questions later. Taxes aren’t just about what you earn—they’re about what you keep.

✔️ Get a customized game plan from a tax adviser before making large transactions. 

✔️ Consider the ripple effects of stock sales on other areas—like Medicare premiums, student aid, or even AMT exposure.

Bottom Line

Capital gains season isn’t just about market timing—it’s about tax strategy. Before you hit “sell,” make sure you're optimizing for more than just your portfolio returns. A little planning now can save you thousands come tax time.

Need help navigating your end-of-year stock sales? 📆 Let’s chat before December 31st.