Author Topic: How do I exchange Vanguard index funds without a taxable event?  (Read 3463 times)

GOFU

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How do I exchange Vanguard index funds without a taxable event?
« on: January 29, 2018, 10:03:45 PM »
Let's say I own two Vanguard funds, a REIT fund (VGSLX), and the total stock market index fund (VTSAX).

Taxable account.

I want to move funds from VGSLX to VTSAX. Is that a taxable event? Is it basically a sale of VGSLX, with realization of gains, followed by a purchase of VTSAX?

Is there a way to exchange Vanguard funds without triggering a taxable event?

Thanks!   

MDM

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #1 on: January 29, 2018, 10:32:16 PM »
Let's say I own two Vanguard funds, a REIT fund (VGSLX), and the total stock market index fund (VTSAX).

Taxable account.

I want to move funds from VGSLX to VTSAX. Is that a taxable event? Is it basically a sale of VGSLX, with realization of gains, followed by a purchase of VTSAX?
Yes.

Quote
Is there a way to exchange Vanguard funds without triggering a taxable event?
Not when held in a taxable account.

GOFU

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #2 on: January 30, 2018, 04:12:45 AM »
Well, dang. That sucks.

Thanks for the response.

Holyoak

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #3 on: January 31, 2018, 07:35:07 AM »
Well, dang. That sucks.

It sure does, especially when you want/need to re-balance your taxable portfolio, and you have ACA insurance subsidies... 

YttriumNitrate

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #4 on: January 31, 2018, 08:53:26 AM »
Is there a way to exchange Vanguard funds without triggering a taxable event?
Do you have anything in the taxable account that you can sell at a loss to offset the gain?

terran

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #5 on: January 31, 2018, 09:20:15 AM »
Not to point out the obvious, but is there any chance you're in the 0% capital gains tax bracket? If you can keep your taxable income (including gains) under $77,400 for MFJ you won't pay federal tax on the gains.

GOFU

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #6 on: January 31, 2018, 01:30:03 PM »
Not to point out the obvious, but is there any chance you're in the 0% capital gains tax bracket? If you can keep your taxable income (including gains) under $77,400 for MFJ you won't pay federal tax on the gains.

All my earned income is subject to the Foreign Earned Income Exclusion. No federal income tax at all for me. This was not obvious to me but it will be from now on. This is a very helpful response. Thank you.

[/quote]Do you have anything in the taxable account that you can sell at a loss to offset the gain?[/quote]

No, no losers, although my REIT is pretty close to one. Thanks for the thought.

Rocketman

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #7 on: January 31, 2018, 01:59:45 PM »
If you are in the accumulation phase, just put all the new additions in the fund you want to buy. You will slowly (maybe) be headed towards your ideal fund allocation.

terran

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Re: How do I exchange Vanguard index funds without a taxable event?
« Reply #8 on: January 31, 2018, 02:04:00 PM »
Not to point out the obvious, but is there any chance you're in the 0% capital gains tax bracket? If you can keep your taxable income (including gains) under $77,400 for MFJ you won't pay federal tax on the gains.

In that case you'll want to do some research. I don't know how the FEIE plays with the capital gains brackets. If you had regular income sourced in the US the capital gains stack on top of the regular income, so both together need to be under the limits.

 

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