MONEY Ask the Expert

Should I Hold Stocks Longer to Lower My Taxes?

If you own a stock for more than a year and sell it, your profits are taxed as capital gains. Photo: Kathy Burns-Millyard/Shutterstock

Q: I’m selling stock to buy a home in two years. Should I spread out the sale to cut taxes? — Angie, Berkeley

A: Go ahead and sell.

Yes, you could possibly save on taxes by waiting: If you’ve owned the shares for a year or less, your profits, treated as ordinary income, would be taxed at 28% — the bracket you report you’re in.

Gains on shares held for over a year, however, would be taxed at 15%, says Stephen Horan, managing director of the CFA Institute.

Related: How to Lower Your Tax Bill

Were gains to push your adjusted gross income up a bracket, past $250,000 ($200,000 for singles), you’d be subject to an extra 3.8% tax on some of the profit — a levy you might avoid by selling the shares over two years.

Delay, though, risks a price drop.

“Trying to save a few dollars in taxes might cost you way more in investment losses,” says David Walters, a financial planner with Palisades Hudson in Portland, Ore.

Cash you need so soon should not be in the stock market.

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