Taking capital gains early for US grad student?

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coiol
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Taking capital gains early for US grad student?

Post by coiol »

I'm a current graduate student at a university in California and I'm wondering if it might make sense to purposely realize and reinvest some of my capital gains in order to pay them off now when I'm at a lower tax bracket. My salary is about $40-50k USD but I also get a $50k USD tuition waiver, which gives me some sort of advantages with tax payments. At the moment I have about $250k CAD spread across TFSA ($48k, maxed because I was out of the country for a while and have a lower contribution limit), RRSP ($43k), and a regular brokerage account ($133k CAD, $20k USD), focusing on index funds and bonds.

I read before that you can't cash out an investment and then immediately reinvest in the same fund, but you can find a similar fund. I have unrealized gains of $13.5k on VXC and $3k on VCN in my regular accounts. Could it possibly make sense to switch those to similar funds in order to take that $16.5k in capital gains this year?
Spudd
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Re: Taking capital gains early for US grad student?

Post by Spudd »

If you're taking capital gains, you can immediately reinvest in the same fund, no problem. It's only for capital losses that you can't.

I guess whether it makes sense to realize those gains now depends on whether you think your future salary will be higher than it is now. It might make sense to realize enough gains to top you up to the top of your current tax bracket. The US/Can thing adds complexity, though.
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