When Is It Worth Realizing Gains?
For clients with long-held appreciated assets, deciding whether to sell can feel like a trick question. The numbers might suggest it’s time to rebalance or diversify, but the tax hit can be hard to stomach. And when an asset has sentimental value—or a strong performance history—the hesitation only grows.
Still, holding too long can come with risks of its own. Here’s how we think about the decision.
Capital Gains in Context
At a high level, realizing gains means triggering a tax bill today in exchange for something else—diversification, liquidity, flexibility, or strategic timing.
For example, some clients sell to:
- Reduce concentrated risk
- Reinvest in a more tax-efficient portfolio
- Fund a large purchase or philanthropic gift
- Take advantage of lower current income (and a lower capital gains rate!)
But timing matters. A sale in a high-income year may push gains into the 20% bracket or trigger the 3.8% net investment income tax. For clients near a Medicare threshold, even modest gains can affect premiums. These are all moving parts we aim to coordinate. The illustration below shows the 2025 tax year brackets for long term capital gains.
At Brickley Wealth Management, this isn’t a once-a-year conversation. It’s part of our ongoing process. We run forward-looking tax projections for clients throughout the year and identify opportunities to realize gains when it makes sense. Often, this work happens quietly in the background, coordinated across our advisory, tax, and investment team to determine the right amount to realize, if any, in the current year.
Tradeoffs Weigh Heavily
There’s often no perfect answer. Consider:
- A tech executive preparing to retire: Realizing gains in a final high-income year may be costly—but so is deferring too long if markets dip or income stays high post-exit.
- A couple with reduced income after retirement but before Social Security and RMDs begin: Realizing some gains now may allow for capitalizing on lower tax rates compared to future higher-income years.
- A business owner nearing sale: Strategic gain realization ahead of a liquidity event may help smooth overall tax exposure.
Each scenario involves judgment, not just math.
It’s Not Always All or Nothing
Clients often assume the choice is binary: sell or don’t. In practice, we can stage gains across years, target specific tax brackets, or pair them with losses, gifts, or deductions.
Some strategies that can help:
- Tax-loss harvesting to offset gains
- Charitable gifting of long term held appreciated shares
- Use of donor-advised funds in high-income years
- Annual gain “budgeting” to stay within a preferred rate
These tools let us shape the tax outcome more deliberately. We often model several gain realization strategies and coordinate to ensure decisions fit into the broader plan.
Takeaway
Realizing gains isn’t just a tax decision. It’s a timing, risk, and planning decision. For clients with complex financial lives, the best path is rarely obvious—and that’s the point. A thoughtful strategy makes room for nuance.
At Brickley Wealth Management, our process is designed to help clients navigate these decisions proactively. We don’t wait for tax season to find opportunities. Instead, we bring the full team together to consider whether realizing gains now, or holding for later, better serves your long term goals.
As with any complex financial decision, it’s wise to consult with a CPA, attorney, or advisor before making changes.
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