Please Sanity Check Investment Withdrawal Strategy

[tk2356]

I have an unusual tax scenario I am looking for advice on:

My wife and I currently live in Europe, but are moving to NYC this Autumn. We will be looking to buy an apartment within the next two years, so I wish to move some of my VTSAX earnings to a money market account to help with the down payment. I currently have $40,000 unrealized, long-term capital gains (total sum is 135k), and I believe I can withdraw much of that at a 0% tax rate.

My plan is to give up my European country residence card, then sell $50,000 of VTSAX (translating to about 15k capital gains). My income for this year will only be $20,000 (military reservist, so local country can't touch that).

My understanding is that, for someone filing married but separately such as myself, if total income is less than $38,500 then the taxes on that long-term capital gains is 0%. As I would fall below that limit, it would be advantageous of me to do so before moving to a high-state/city tax area, where I would earn more money and lose this tax opportunity.

Does this plan pass the sanity test? Is there anything I'm overlooking? Thanks in advance!!!!

[Curmudgeon]

For 2018, MFS filers pay 0% LTCG tax for taxable (not "total") incomes less than $38,600.  This is after your standard deduction of 12,700.  So, just considering the std. ded. and ignoring other tax intricacies, you could have a total income in the neighborhood of 51,300 and pay 0 LTCG tax.  Note that this is federal (US) tax only; it's possible that NY will still want a piece of that.
It definitely makes sense to take advantage of the 0% rate while/when you can, though I'm not sure what effect other details of your plan would have on this.

[tk2356]

I hadn't thought of the standard deduction factoring in -- Looks like I can withdraw a bit more if needed. Thanks for the advice!