Timing my sale of bond funds

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spartanap
Posts: 41
Joined: Sun May 25, 2014 9:16 pm

Timing my sale of bond funds

Post by spartanap »

I have $7000 in ACITX (American Century Inflation Adjusted Bond) and $35,000 in TWTIX (Interm. Term Tax-Free Bond) as a part of the taxable portion of my portfolio. In an effort consolidate my holdings, I want to get out of both funds and move the money to Vanguard where I have the vast majority of my portfolio. In order to spread out the impact of gains on both funds, I plan to move half before the end of the year, following distributions, and the rest after the first of the year. I don't have a lot of experience with selling funds, but this seems like a fairly straightforward transaction. I would appreciate any feedback on this plan. Thanks.
DSInvestor
Posts: 11362
Joined: Sat Oct 04, 2008 11:42 am

Re: Timing my sale of bond funds

Post by DSInvestor »

Check to see what your cost basis is relative to current value. THe cost basis may be much higher than you think if you have been reinvesting dividends. Capital gain = gross sales proceeds - cost basis.
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dbr
Posts: 33842
Joined: Sun Mar 04, 2007 9:50 am

Re: Timing my sale of bond funds

Post by dbr »

As above, it is unlikely you have much capital gain to worry about. You can also test the actual impact on your tax return as the tax rate on capital gains is zero if your income (including the gain but after exemptions, etc.) is low enough.

Also, of course, at year end splitting the sale across two years is a common strategy. You might check whether or not you actually would have a capital loss. In that case you might prefer getting it this year.
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