Hello Everyone,
I'm relatively new to the site, but I have been watching and learning. My wife and I are recently retired with no taxable income other than interest income we are getting from treasures and ROTH conversions to fill the 12% tax bracket. When I met with my Fidelity representative, he saw that we had $30K+ in Treasury interest income that we have to pay taxes on annually. He suggested that I move some of the taxable account into Deferred Fixed Annuities that will produce Capital Gains instead which don't get taxed when gains are below $94K. This sounds like a good option that I am researching as long as I can avoid fees and treat it like a deferred CD.
My question is that if I bought low interest rate treasury notes on the secondary market at a discount and hold to maturity would the difference between price paid and par be all capital gains? I know I would still have to pay income taxes on the low interest rate income. Does any de minimus rule apply here as I have seen with municipal bonds?
For example: Buy a 5 year treasury with a 1% coupon at $920 each and then at maturity get par value of $1000. Would this this be a $80 capital gain at maturity year? If yes, then buying deeply discounted treasuries would be a lower tax solution for people with low incomes.
Thanks for your help,
Phil
I'm relatively new to the site, but I have been watching and learning. My wife and I are recently retired with no taxable income other than interest income we are getting from treasures and ROTH conversions to fill the 12% tax bracket. When I met with my Fidelity representative, he saw that we had $30K+ in Treasury interest income that we have to pay taxes on annually. He suggested that I move some of the taxable account into Deferred Fixed Annuities that will produce Capital Gains instead which don't get taxed when gains are below $94K. This sounds like a good option that I am researching as long as I can avoid fees and treat it like a deferred CD.
My question is that if I bought low interest rate treasury notes on the secondary market at a discount and hold to maturity would the difference between price paid and par be all capital gains? I know I would still have to pay income taxes on the low interest rate income. Does any de minimus rule apply here as I have seen with municipal bonds?
For example: Buy a 5 year treasury with a 1% coupon at $920 each and then at maturity get par value of $1000. Would this this be a $80 capital gain at maturity year? If yes, then buying deeply discounted treasuries would be a lower tax solution for people with low incomes.
Thanks for your help,
Phil