Author Topic: Capital Gain Harvesting between Two Index Funds  (Read 418 times)

JenniferW

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Capital Gain Harvesting between Two Index Funds
« on: September 14, 2018, 07:02:39 PM »
My income is low because SSDI isn't taxable and my self employment income is around $8k per year -- actually I even currently get earned income tax credit of $500.

So this allows me to get some fairly large long term capital gains without being taxed on them federally (the state is a different story as Oklahoma  taxes even the poorest 5% on capital gains, but can't get around that).

My question is can I switch between say VTI and VGT  and have them not be considered a "wash" sale?   Seems a bit clever and pushing it as compared to switching single stocks (not indexes).   The indexes have similar patterns one with a bit more volatility than the other.

I guess my other question is, is it worth it to do this since Oklahoma really doesn't have any income limits as far as how much they charge on long term capital gains?  With even my current limited income I'd literally have to pay 5% long term capital gains on the sale.  (Starting to wish I lived in Florida which has 0% capital gains tax and low property taxes.)

ILikeDividends

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terran

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Re: Capital Gain Harvesting between Two Index Funds
« Reply #2 on: September 14, 2018, 07:34:56 PM »
You don't need to worry about wash sales when capital gain harvesting, that only applies to selling at a loss, so you can just sell VTI and then buy it again.

Remember that capital gains may effect your EITC, so while you might not pay taxes exactly any reduction is essentially the tax you pay.

JenniferW

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Re: Capital Gain Harvesting between Two Index Funds
« Reply #3 on: September 14, 2018, 07:39:24 PM »
Oh that's right, wow I wasn't thinking right.  Wash sales have nothing to do with gain harvesting.  I was thinking about both at the same time, lol.  Just read about them both.