Author Topic: Vanguard investment in December - any tax consequences?  (Read 1682 times)

keyvaluepair

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Vanguard investment in December - any tax consequences?
« on: November 25, 2017, 09:34:41 AM »
Hello all,
I've got about 300K that we want to put into VTSAX. If I put it in now, do I get assessed the capital gains distributions for all of 2017? Or do I wait till EOY?
thanks
kv

seattlecyclone

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Re: Vanguard investment in December - any tax consequences?
« Reply #1 on: November 25, 2017, 09:45:01 AM »
You will receive whatever year-end distributions the fund pays out, and will be taxed on them accordingly. VTSAX doesn't usually have capital gains distributions though, just the typical quarterly dividends. Their VTSAX information page states that the fund has realized a capital loss for the year through the end of October, so I'd expect another year with no gains to distribute.

keyvaluepair

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Re: Vanguard investment in December - any tax consequences?
« Reply #2 on: November 25, 2017, 12:32:49 PM »
Thanks @SeattleCyclone. So just taxed on the dividends or is it a tax writeoff. And how did the fund manage a loss in spite of gains?

seattlecyclone

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Re: Vanguard investment in December - any tax consequences?
« Reply #3 on: November 25, 2017, 04:10:46 PM »
You're taxed on the dividends. Funds are only required to report and distribute gains on shares that they actually sell. As the goal of this fund is to own shares in everything, and money tends to flow into the fund more than out, it tends not to sell much.

TempusFugit

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Re: Vanguard investment in December - any tax consequences?
« Reply #4 on: November 25, 2017, 05:06:28 PM »
That's one of the advantages of an index fund - there isn't much churn in the holdings so you don't get hit with a large capital gains tax bill (in your taxable holdings). 

keyvaluepair

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Re: Vanguard investment in December - any tax consequences?
« Reply #5 on: November 26, 2017, 06:31:08 AM »
Thanks guys. I've been fairly mechanical in terms of index fund investments to date. FIRE changes that....

Acastus

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Re: Vanguard investment in December - any tax consequences?
« Reply #6 on: December 12, 2017, 01:39:26 PM »
You can avoid paying taxes on dividends and capital gains distributions if you purchase after the distribution, usually around 12/20. Why pay this small tax for no reason? Unless you are concerned about the opportunity cost of waiting 2 weeks.