Federal capital gains tax is assessed on the sale of certain assets, such as stocks, bonds, real estate, and precious metals. And based on where you live, you may also owe state capital gains tax when selling these types of assets.
We all think of taxes as unavoidable. But did you know that paying capital gains tax is optional? You have a few choices: you can pay the tax (the expensive option), you can postpone the tax (delay the tax consequences), or you can avoid the tax with careful planning.
One way you can avoid capital gains tax is by gifting appreciated property through your estate at death. When the property owner dies, the cost basis is stepped-up to the value at the date of death. In addition, if you gift the asset to charity, when the charity sells the asset, it pays no capital gains tax.
You can also transfer assets to a charitable trust. You can receive income from the trust for life or for a term of years with the agreement that the charity will receive the principal at the termination of the trust and there will be no capital gains tax payable at the time of transfer or when the trustee sells the asset.
If you’d like to learn more and discuss your options for mitigating capital gains tax, talk to your financial adviser, or contact us at CDF Capital.
