Capital Gains on index Funds

3 Replies

I understand when you sell index funds, as long as you hold your fund for a year or longer, the tax rate is long-term capital gains.

My question: When I continually buy shares of VTI (Vanguard ETF) on a monthly basis, how can I accurately determine how many shares I could see without being penalized my the short term vs. long term cap gains tax rate?

HypotheticL example: if I buy 10 shares of VTI every month, and I’ve been doing this for 5 years. I have 600 shares after 5 years. If I wanted to sell everything at once, Does this mean I can only sell 480 shares for the long term capital gains tax but would have to pay short term cap gains tax on the shares that I recently bought within that year?

Apologize for the winded question, but haven’t been able to find a straight answer anywhere.

@Sean Murphy

I think you aren't finding a straight answer because there is more than one answer.

I believe you can use one of two methods to determine taxable gains - FIFO or LIFO

Here's an article from Zacks that can explain it better than I can. It's not specifically about the tax but more-so about the cost basis:

https://finance.zacks.com/determine-shares-sell-fifo-lifo-9766.html

Hopefully this helps.

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