2013 Capital Gains Tax: Beware Of The Bite


Check out these strategies to bypass capital gains altogether or at least lessen the bite.

Unless you've been paying close attention to capital gains and your expected 2013 tax, then you may not realize a potentially large "bite" until tax season. For those in the know, however, there is still time to beat the capital gains tax in 2013 and beyond. 

For some ideas to consider before it is too late, take a look at a recent Forbes article titled “How To Beat The Big 2013 Capital Gains Tax Hike.

The Great Capital Gains Tax Hike of 2013 was essentially the double-pronged effect of the eclipse of certain tax cuts mixed with a brand new surtax. More specifically, the gains tax was allowed to bounce from 15% to 20%, and Obamacare added to the pain with a new 3.8% surtax to high earners. If you are doing the math, then that equates to a new rate of 23.8% for many (a near 60% increase from the year then ended).

So how do you beat it?

Here are 11 strategies to consider, according to Forbes:

  1. Invest in your primary residence.
  2. Manage your tax bracket.
  3. Harvest losses.
  4. Gifts to family members.
  5. Gifts to charity.
  6. Feed retirement accounts.
  7. Open a 529 college savings account.
  8. Buy and hold.
  9. Move to a tax-friendlier state.
  10. 1030 exchanges.
  11. Charitable trusts.

Each of these strategies has merit.

Nevertheless, the key is to evaluate them (and others) with your professional advisors in the context of your medium and short-term financial and estate planning goals.

The tax “tail” should never automatically control the planning “dog.”

To talk to Terry Bertram, an estate planning attorney about your estate planning needs, visit www.elderlawannarbor.com.

Reference: Forbes (September 13, 2013) “How To Beat The Big 2013 Capital Gains Tax Hike

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