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Tax considerations for investments

KDM provides tax support, not investment management. Coordinate tax decisions with your financial adviser and consider risk, liquidity and investment goals.

Know the account’s tax treatment

Taxable brokerage, traditional retirement and Roth accounts follow different rules. Review how interest, dividends, gains and withdrawals are taxed before moving investments.

Document gains and losses

Track basis and holding periods. Tax-loss harvesting must account for wash sales, including transactions in other accounts. The deduction for net capital losses against ordinary income is limited; unused amounts may carry forward.

Check the details of tax-favored income

Qualified dividends, municipal-bond interest and long-term gains have specific requirements and exceptions. Compare after-tax results rather than assuming all income in a category is exempt.

Plan real-estate exchanges before the sale

Section 1031 can defer qualifying real-property gain when the requirements are met. Identification and completion deadlines are strict. Consult the tax adviser, attorney and qualified intermediary before closing.

Review state exposure

Becoming a Florida resident does not automatically eliminate another state’s tax on property, business or other source income.

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Related guidance

Tax and bookkeeping for real-estate investors

Keep property records clear and review tax consequences before buying, improving, refinancing or selling.

Tax planning for individuals and families

Review withholding, retirement contributions, investments and major life changes together rather than choosing a deduction in isolation.

Tax planning for business owners

Review your tax position while there is still time to act. Planning starts with current records and compares the cost, timing and requirements of each option.

§ FAQ

Questions we hear about tax-smart investing.

Where should I hold high-tax investments like REITs and taxable bonds?

Put high-tax-drag assets such as REITs, actively traded funds, and taxable bonds inside tax-deferred accounts like a 401(k), where their tax cost is sheltered. Keep low-tax-drag assets such as broad-market index funds, municipal bonds, and qualified dividend stocks in taxable brokerage accounts. The same dollar can produce very different after-tax returns depending on which account holds it.

How does tax-loss harvesting work and what is the wash-sale rule?

Tax-loss harvesting means selling positions that are down to realize a loss, then reinvesting in a similar but not identical security. The realized loss offsets your capital gains, and up to 3,000 dollars of excess loss can offset ordinary income. Watch the wash-sale rule, which applies for 30 days on either side of the loss sale and can disallow the loss if you buy back an identical security.

What is the difference between qualified and ordinary dividends for taxes?

Qualified dividends are taxed at long-term capital gains rates of 0, 15, or 20 percent, while ordinary dividends are taxed at your marginal rate. To qualify, you must hold the stock through a specific window around the ex-dividend date. Most US-stock index funds produce nearly all qualified dividends, while REITs almost never do.

Do municipal bonds make sense for Florida investors?

Interest on municipal bonds is generally federal tax-free, and in-state bonds are also state tax-free. Florida residents do not get the state-tax exemption because Florida has no state income tax, but the federal exemption still matters for high-bracket filers comparing taxable and municipal yields.

How can I defer capital gains tax when selling investment real estate?

A Section 1031 like-kind exchange lets you defer the entire capital gains tax by rolling the gain from appreciated investment real estate into a replacement property. The timing rules are strict: you have 45 days to identify the replacement and 180 days to close. Plan the exchange before you list the property, not after.
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