What tax benefits are there when investing in stocks?
July 9, 2024 | 40,00 EUR | answered by Paula Köhler
Dear tax advisor,
My name is Anneliese Böhm and I have been intensively studying the topic of investing in stocks in the past months. I have already gained some experience and also made some profits. Now, I am wondering what tax benefits there are when investing in stocks and how I can optimize them.
Currently, I am mainly focusing on buying dividend stocks, as I aim to benefit from regular payouts in the long term. At the same time, I also want to take advantage of tax benefits to maximize my returns. However, I am unsure about which tax aspects I need to consider and how best to tax my gains.
My concern is that I may overlook or incorrectly apply tax benefits, which could lead to long-term financial losses. Therefore, it would be very helpful for me if you could explain in detail what tax benefits exist when investing in stocks and how I can specifically utilize them. Are there specific tax-free allowances or tax rates that I should be aware of? What are the tax pitfalls and how can I avoid them?
I would greatly appreciate your support and expertise in this area to help me achieve my financial goals optimally. Thank you in advance for your assistance.
Best regards,
Anneliese Böhm
Dear Ms. Böhm,
Thank you for your inquiry and your interest in investing in stocks. I am glad to hear that you have already achieved some initial successes and are actively engaging with this topic.
When investing in stocks, there are indeed various tax advantages that you can use to maximize your returns. One of the biggest advantages of buying dividend stocks is the so-called withholding tax. Currently, this is set at 25% and is withheld directly by your bank or broker and remitted to the tax office. This means that you do not have to worry about paying taxes on your gains yourself.
Another tax advantage that you can take advantage of when investing in stocks are tax-free allowances. For example, as a single person, you have an annual tax-free allowance of €801, which doubles to €1,602 for married couples. This means that you can realize gains from stock sales tax-free up to this amount. Only when you exceed this tax-free allowance do you have to pay taxes.
It is also important to note that you can offset losses from stock sales against gains. So, if you incur losses in one year, you can offset them against gains from other stock sales and save on taxes.
One tax pitfall that you should definitely avoid is the speculation period. If you sell stocks within one year of purchase, higher taxes apply. To avoid this, you should hold onto stocks long-term and only sell them after the expiration of the speculation period.
To optimize your tax advantages, I recommend staying informed about current changes in the law and carefully documenting your stock transactions. If you are unsure whether you have done everything correctly, you can also seek advice from a tax advisor like myself, who can assist you in optimizing your tax burden.
I hope this information helps you and wish you continued success in investing in stocks.
Sincerely,
Paula Köhler
