【Dividends and 'Wash Sales': The Two Major 'Hard Nuts' in Overseas Investment Taxation】
When global investors handle overseas investment taxation, besides the basic gains and losses from settlements, there are two special points that must be noted; they are the 'hard nuts' in transaction planning.
First, dividends and interest. Unlike the capital gains from buying and selling stocks, once dividends are distributed, they are considered certain, realized income. This portion of income cannot be deferred by buying other assets at the end of the year; it is a tax item that must be directly addressed. This is particularly important for investors who prefer high-dividend strategies.
Second, avoiding 'Wash Sales'. Some investors may sell losing stocks at the end of the year to realize losses for offsetting gains, but they do not want to miss out on subsequent increases, so they quickly buy back the same stocks. Such operations may be considered 'Wash Sales' for tax purposes in many Western countries, and the losses will not be recognized. To realize losses, a more secure method is to sell and wait for more than a month before buying back, or directly switch to a different stock.
Refined tax management not only requires understanding how to defer income but also knowing what cannot be avoided and which operations are ineffective.
Is there a high proportion of high-dividend stocks in your portfolio? Have you considered their tax implications?
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Not investment advice.
