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What’s the deal with Smart Portfolio taxes?

Because Smart Portfolio is structured as a taxable personal account, the tax implications for your Smart Portfolio are almost the same as those for your Personal Portfolio. In general, a security sold at a gain will be subject to taxes on the difference in the sales price and the cost of purchase. The exact rate of taxation depends on the length of time the security was held (whether it will qualify as a long-term or short-term gain) and your income tax level. 

Compared to your personal brokerage account, a key difference regarding taxes lies in the Smart Portfolio rebalancing process.  Rebalancing is the buying and selling of investments— it brings your portfolio back in line with the target mix that Stash recommends  (based on your risk profile). The rebalancing process is standard across the financial industry and may generate some taxable events in the short term—in order to keep your portfolio healthy for the long term. 

Please consult a tax professional for any additional tax related questions. 

 


DISCLOSURES

This information should not be construed as investment, tax or legal advice. Calendar rebalancing is automatic and does not require ongoing, active monitoring of ETF thresholds in Client accounts. Stash does so on a best efforts basis and does not take into account individual tax, market, or legal circumstances. In some market conditions, this may create capital gains tax liabilities. Clients must consult with a tax or legal professional for such information.

A “Smart Portfolio” is a Discretionary Managed account whereby Stash has full authority to manage.

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