Capital gains rates more favorable for 2008?

[justin]

So, for example, I'd be moving money out of
American Funds News Perspective into Vanguard Total Int'l.

I'll be dumping a bunch of american funds in 2008-2010 as well to move into my vanguard index funds. After getting many thousands of dollars in cap gains this year on the American Funds funds, I'm starting to appreciate the tax advantages of index funds. Especially when the cap gains rates will be going up in 2011.

Here's something to remember for you folks with state taxes - you'll still be paying the full marginal state income tax rate on those capital gains that the fed is charging you zero on. For me that is 7%! Not a free lunch, just a reduced price lunch.

 

[dmpi]

I also think that people may begin to sell securities to take advantage of the lower rates, which will depress prices. Once the selling starts, it could be ugly.

I think that most people will sell and then buy back the very same stock.
I remember last time they raised taxes; Schwab had a deal where you could sell & buy right back with one commission. They would also guarantee you the same price for buy and sell. Mighty generous of them for doing basically nothing!

 

[HFWR]

Wouldn't the wash sale rules apply to this strategy?

 

[Behan]

That wouldn't apply here since this is about paying lower capital gains tax on profits. The wash rule is for sales at a loss. So you can't recognize the loss if you sell a stock at a loss, and then buy the same (or nearly same) stock back within 30 trading days before or after the sale.

 

[HFWR]

Never mind...

 

[Nords]

You probably already have this handy table from Fido: http://personal.fidelity.com/planning/tax/pdf/fidmatrix.pdf

Ooooh, that's excellent, thanks.

I've never used the Fidelity planners... I'm ER'd, college is planned for, FIRECalc does a better job, and I already know where to find a good surf forecast.

But now I'm going to have to take another look!

 

[lazyday]

You're welcome, Audrey and Nords.

Too tell the truth, I thought I may have picked that link up from you, Nords!

 

[Nords]

Too tell the truth, I thought I may have picked that link up from you, Nords!

Well, judging from my awareness level around here the last few months, you may be right...

I just hope that when I file this printout it's not sitting right next to one that I printed out last year.

Whew, OK, it's the first time I've printed it.

 

[samclem]

Great chart--thanks.
The estate tax changes before and after 2010 are an eye-opener. If you are worth a lot of money, it might not be a good idea to go rock climbing or hunting with Junior in 2010. No sense in tempting him.

 

[LOL!]

Hmmm, it looks like this 0% cap gains rate will force me to retire in 2008.

It reads like we can work a few weeks in early 2008 and fill up our 401(k)s leaving just a couple thousand in taxable income. Then realize LT cap gains, take the child tax credits, convert some IRAs to Roths and meet you on the beach.

I guess I just don't understand what our lawmakers were thinking. I must not have this correct.