I have about 18% of my investable portfolio in after-tax individual stocks (approx. 15% in a single one from a long-term company stock purchase program, with the rest in a larger number of individual stocks which don't really give me concern because they're a very small percentage of the total).
Obviously as a Boglehead I'm not comfortable with such a large percentage of my portfolio in one stock. To effectively avoid Capital Gains on these appreciated shares, I've decided on making my normal yearly charitable donations via this stock but the reinvested dividends purchasing new shares keep up with the depleted shares (a good problem to have).
However, I was reading about Long-Term Capital gains and saw the following statement:
Am I to understand that for my first year of retirement, if my income (via dividends and interest) is below approximately $37k (putting me in the 15 percent tax bracket), I could sell these appreciated shares and pay NO capital gains taxes? (and the sale of these shares would not add to my income for the year?)Stocks you hold longer than a year are subject to a long-term capital gains tax rate when you sell them. This tax rate is capped at 15 percent, so even people in the top income tax bracket pay only 15 percent on long-term gains. If your normal income tax rate is 15 percent or 10 percent, you don't owe capital gains taxes on long-term stock gains.
This seems too good to be true and would allow me to live on the sale of this stock for a handful of years of my early retirement without losing a large amount of the stocks value via taxes. Am I looking at this correctly?