The maximum tax on long-term capital gains is now 15%. That could change in 2013:
* Unless Congress acts, the maximum tax on long-term gains will rise to 20%.
* In addition, a 3.8% surtax on investment income is scheduled to go into effect for taxpayers with income over $200,000 ($250,000 for couples filing joint returns), as part of the health care laws passed in 2010.
Therefore, if you hold appreciated securities in a taxable account, you must make a choice. You can sell this year, to use the low tax rate. However, that will give you less money to reinvest, after paying the tax.
Alternatively, you can hold on and keep deferring the tax. One tactic is to delay until year-end, when you can see how the tax code will or won’t change in 2013. Even if your tax rates will be going up, deferring the tax may be the better option if you expect to keep holding on for 10 years or longer. By not paying the tax now, you’ll have more assets in place to appreciate over the long term.
