I have big gains and holdings in some stocks bought at much lower prices over 10 years ago. I'm getting old, and within 10 years or so, the stocks will be sold one way or another by me or my estate.
If the stocks are sold all at once, a big capital gain will result, and I will be taxed at the high rate corresponding to the high income. It would be better to sell the stocks over several years, so as to avoid getting my income too high.
My strategy that I recently started is to sell 5 to 10% of my big-gain stocks every year. I don't yet really need the resulting cash and I think those stocks will continue to be good investments, so I then quickly buy back all or most of those same stocks. This has the effect of raising my adjusted cost basis (ACB) for the stocks, this should somewhat reduce my capital gains the next time I sell off some of those stocks. I currently have enough cash to pay the resulting taxes, but in later years I will need to avoid buying back all the sold stocks, so as to retain some cash to pay the taxes.
It would probably be a good idea to sell the stocks by writing covered call options, to get additional income. I have not done that yet, need to learn more about options.
So I am deliberately and at first glance, without necessity, taking capital gains and paying the taxes, but I think it could be a good strategy. |
