Tax Efficient Investments

When it comes to investments there are 4 types from a tax standpoint:
1. Taxable Investments
two. Tax-Free Investments
3. Tax Advantaged Investments and
four. Tax Deferred Investments

The purpose of this post is to present an overview of the kinds of investments that are the most tax effective.

1. Municipal Bonds - Exempt from state tax of the state in which the obligations are issued
2. Municipal Bond Funds - Exempt from state tax of the state in which the obligations are issued
three. Municipal Bond Trusts - Exempt from state tax of the state in which the obligations are issued
4. Cash Surrender Value Loans
five. Roth IRA
6. Roth 401(k)
7. 529 Plan distributions applied for qualified higher education costs, including room and board
8. Series I or EE Bonds - Earnings exempt if made use of for qualified higher education costs
9. Coverdell IRA (aka Education IRA) - Earnings exempt if employed for qualified education costs (tuition:
elementary school, high school, tutoring and college)
ten. Earnings on investments held in Well being Savings Arrangements made use of to pay for eligible medical expenses

1. Treasury Bills
2. Treasury Notes
three. Treasury Bonds
four. Sallie Mae Mortgage Backed Securities
five. EE Bonds
6. I Bonds

1. Real Estate Investments
two. Rental Properties
three. Principal Residence - Up to $500,000 ($250,000 if single) of gain excluded
4. Single Premium Life Insurance Merchandise
5. Regular IRAs
6, Stocks held far more than 1 year
7. Exchange Traded Funds held much more than one year
8. Mutual Funds held additional than one year
9. Vacation Houses
ten. Precious Metals/Collectibles/Coins - 28% maximum long-term capital gains tax rate
11. Genuine Estate Investment Trusts
12. Qualified Smaller Business enterprise Stock - 50% acquire exclusion. Balance subject to 15% long-term capital gains

1. I Bonds
2. Fixed Annuities
three. Variable Annuities
4. EE Bonds
5. Standard IRAs
6. 401(k) Plans
7. 403(b) Plans
8. 457 Plans
9. Qualified Little Enterprise Stock - Proceeds utilized to obtain new Qualified Tiny Small business Stock
10. 529 Plan Investment earnings are deferred until utilised for qualified higher education costs.

Some of the above mentioned investments may be subject to state and local income taxes as nicely as the federal alternative minimum tax. For far more details concerning this, please consult with a tax advisor or lawyer.