Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients may be in a better position to do tax-loss harvesting now instead of waiting until the end of the year, according to CNBC. Normally, taxpayers largely identify the same investments or stocks that have declined in value, and so your client may in fact be selling at a lower price than he or she needs to. Also, in December, volumes often dry up, so this article suggests taking tax losses throughout the year. -- CNBC
Many clients have not used their principal home at least two of five years before selling the property, inadvertently losing the privilege of capital gains exclusion of up to $500,000, according to Forbes. As such, clients who consider selling their home are advised to take advantage of the available benefits by knowing the tax rules. -- Forbes
Clients are advised to take advantage of the health savings account that their employer offers to reduce their taxable income, according to The Wall Street Journal. Such an option also offers free money via employer contributions, while growth from investments is not subject to tax. When HSA funds are used to pay for health-care expenses in retirement, clients can take advantage of a tax-free trifecta: current tax deduction, tax-free growth, and tax-free distribution. -- The Wall Street Journal
Returns from investments in shadow banking can earn between 6% and 14% even in a low-yield environment, according to Barrons. Many large fund managers have launched huge direct-lending funds to small and medium-sized businesses and offer them floating-rate loans. However, it is best for clients to avoid leveraged funds because it may goose returns especially at times when borrowers have trouble paying down high-interest loans. -- Barrons