Tax Strategies Scan: Facing Capital Gains

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

2015 capital gains tax: 5 things you need to know: Investors are advised to avoid selling if they want to avoid paying capital gains taxes, according to The Motley Fool. Clients who sell investments they owned for more than a year will not pay long-term capital gains taxes if they are in the 10% or 15% tax brackets, while those who sell securities they hold for less than a year are likely to face hefty capital gains taxes. Selling losing stocks to offset capital gains is highly recommended, while holding on to the assets until death is another strategy to avoid paying capital gains taxes. -- The Motley Fool

After a bad year for funds, prepare for a tax hit in 2015: Investors will face higher taxes as many mutual funds have paid out taxable gains despite the funds' underperformance last year, according to The Wall Street Journal. These funds no longer have big losses that can offset the capital gains coming from the profit drawn when they are sold. The distributions indicate that actively managed funds are “generally less tax-efficient than index funds and exchange-traded funds,” says Dan Newhall, a principal at Vanguard Group. -- The Wall Street Journal

3 smart ways to use your tax refund in 2015: Taxpayers who receive a tax refund are advised to put the money in their IRA and other retirement accounts, instead of using the extra cash on shopping, according to The Motley Fool. They may also contribute to a tax-advantaged account for their children's education using the refund. Spending the refund money on home improvements is another good option. -- The Motley Fool

Personal finance Q&A: Consider tax implications when downsizing: A retiree who plans to downsize is advised to account for the tax issues when selling a house, according to The Los Angeles Times. They may pay considerable capital gains tax from the sale, while her heirs could face a tax basis that is equivalent to the house's value at the time of her death. -- The Los Angeles Times