Managing capital gains tax liability can significantly reduce your tax burden. Here are some ways to get started.
Updated Jan 30, 2023 · 5 min read Written by Tiffany Lam-Balfour Lead Writer Tiffany Lam-Balfour
Lead Writer | Merrill Lynch, UBS AG, UBS Global Asset Management, Credit Suisse
Tiffany Lam-Balfour is a former investing writer and spokesperson at NerdWallet. Previously, she was a senior financial advisor and sales manager at Merrill Lynch. Her work has been featured in MSN, MarketWatch, Entrepreneur, Nasdaq and Yahoo Finance. Tiffany earned a finance and management degree from The Wharton School of the University of Pennsylvania.
Lead Assigning Editor Chris HutchisonChris Hutchison helped build NerdWallet's content operation and has worked across banking, investing and taxes. He now leads a team exploring new markets. Before joining NerdWallet, he was an editor and programmer at ESPN and a copy editor at the San Jose Mercury News.
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Being proactive about managing your investments can help reduce your capital gains tax bill, retaining more assets for you to invest and grow.
Note: Our focus in this article is on capital gains strategies for securities investing. If you're looking for a strategy to minimize capital gains taxes on real estate investments, read our story on 1031 exchanges .
There are various types of investment accounts, some of which are tax-advantaged. For example, 401(k)s , IRAs , 529s , HSAs and irrevocable trusts provide different tax benefits. Being thoughtful and intentional with which accounts you save into and the investment selections within each type of account can help trim your tax burden.
A good rule of thumb is to use tax-advantaged accounts for more actively traded positions or less tax-efficient investments and to direct your buy-and-hold investments or more tax-efficient investments into taxable brokerage accounts.
