Selling stocks and other assets requires planning, especially about the taxes that such sales would incur. Some people are too eager to get a property off their hands or are very keen on closing a deal. As a result, they pay a higher capital gains tax than they should. Avoid making this mistake by keeping the following things in mind.

Plan for selling long-term capital gains assets

The jump from a short-term and long-term capital gains tax is notable, so don’t sell at a profit without knowing your asset’s classification and when the revenue service has established this. If you do not check the date of purchase, you might end up selling on a short-term status months before qualifying for a long-term one.

Your asset should have gone up in value for more than a year to qualify as long-term. If you sell at the one-year mark, that will only be eligible as a short-term sale. Hang onto your investments for a little longer to make the most of the status.

Sell at a loss if it means offsetting gains taxes

Conversely, avoiding taking a loss by hanging onto losing investments is unadvisable. It isn’t the same as holding good assets with a track record of bouncing back after the market takes a hit.

If an asset depreciates, you lose money, plain and simple. You can realize the loss by selling, or you can keep it and potentially magnify the losses and the accompanying fees. A good rule of thumb is not keeping assets that you wouldn’t buy given the present market.

If you sell your depreciating assets in the same year that you sell others at a gain, you may offset your earnings and save on taxes.

Donate recently high-value stock to charity

Instead of selling stock that has gone up in value and donating the cash to charity, consider giving the stock itself. Donating stocks will enable you to collect a tax deduction for its current value. Furthermore, you won’t be required to pay capital gains.

Sell assets strategically; use your tax bracket

Know your tax bracket and use it as a guidepost for when to sell assets. The lower the income level, the lower the capital gains tax rate, and in specific brackets, the percentage is even at zero.

Don’t sell too many assets at a gain in one year. Likewise, avoid disposing of high-value investments in a year when you are making good money, or you will bump your tax bracket up.

Make wise investment decisions

No amount of tax avoidance will make up for bad investments. If you are hanging onto bad assets to avoid paying capital gains, you are not playing to win. Owing taxes is not the worst thing that can happen to an investor.

Losing money or holding a losing stock is much more damaging than having to pay the IRS. Listen to your gut about assets. If you don’t think that something is a wise investment, sell it and move to another endeavor.


You can leverage your capital gains tax in various ways. Keep in mind our five tips for avoiding overpaying on your taxes, and you’ll surely make the most of your investments.

Let our team at PJL Investments handle the strategizing for your assets! We offer financial planning services and investment management in the United States. Contact us today to make your capital gains tax work for you!