An investment can increase substantially in value without creating an immediate federal income tax bill. In a taxable account, gains generally aren’t taxed until the asset is sold. That tax deferral can be valuable, but when and how the gain is eventually realized can have a significant effect on the rate you pay. Holding period, income level and the size of the gain can all influence the eventual tax treatment.
A financial advisor can help you evaluate when to realize investment gains and how a sale could affect your taxes, portfolio allocation and broader financial plan.
How Unrealized Gains Are Taxed
An unrealized gain is the increase in an investment’s...
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