I am a college student graduating this upcoming year. I have a decent amount currently invested in a taxable brokerage account.

For the 2019 year I would be in the 0% long term gains bracket and 12% marginal income bracket (which I believe is used for short term gains). Next year I anticipate moving into the 15% long term gains bracket.

Since the market is up, before the year is out I was thinking of trying to realize these gains (I have a mixture of both short term and long term gains currently) by selling and just rebuying the same positions. Since both tax rates are lower than long term gains will be next year I was thinking of doing this for both.

Is this a smart idea or am I missing something? Are there any other considerations I should be aware of?

  • 2
  • @GendoIkari That makes sense for long term gains. Any considerations for short term gains? – carloabelli Dec 19 '19 at 7:25
  • You have to take into consideration any of these that are applicable: Additional taxes, commissions, time out of the market (settlement), frequency of trading limitations by the broker, bid/ask spread loss. When you know what these numbers are, you'll be able to make an informed decision. It's a good idea to book taxable income in low tax years. My income varies year to year so I withdraw more from my sheltered accounts in low tax bracket years, only for the sake of reducing the tax bite. Make sure that these are only gains otherwise you'll run afoul of the wash sale rule. – Bob Baerker Dec 19 '19 at 14:14