Capital Gains Taxes Trap: How to Avoid Mutual Fund Tax Bombs

It’s bad enough when your mutual fund’s assets lose value, but owing unexpected capital gains taxes after those losses is doubly frustrating.

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(Image credit: Getty Images)

Many know that capital gains taxes are what you owe when you sell an investment that has gained value since you bought it. What’s less well-known is that you can end up owing capital gains taxes on an investment that has lost value since you purchased it and that you haven’t even sold!

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Samuel V. Gaeta, CFP®
Principal, Director of Financial Planning, Defined Financial Planning

As Principal and Director of Financial Planning, Sam Gaeta helps clients identify financial goals and make plan recommendations using the five domains of financial planning — Cash Flow, Investments, Insurance, Taxes and Estate Planning. He is responsible for prioritizing clients' financial objectives and effectively implementing their investment plans and actively monitors the ever-changing nature of clients' financial and investment plans.