What to consider when selling stock to buy investment property

[David Yee]

Hello! I am currently 33 years old and most of my investments are in the S&P 500 as well as other index funds. I am considering selling some of my stock (between $50k and $100k) to put a down payment on a rental property. I already have a mortgage on the house that I live in.

What do I need to consider when determining whether I should sell stock to make a down payment on an investment property? Thank you! 

[Damon Kellar]

^^^^  This.
Most decent brokerage firms will keep track of the basis in various distributions you have.  Depending on your income / current effective tax rate (the rate that applies to the next $ you earn), I would seek to minimize the overall impact.  LT capital gain is typically at 20%, whereas ST capital is at your ordinary income effective rate.  

For example - I bought 100 shares of AAPL 8 years ago.  If I sell those shares (or a portion of those shares) it's all LTCG.  But if I sell the dividend reinvested shares that I just got it could be a mix of STCG or LTCG depending on age.  Those shares also have a higher basis that if I sell those I would recognize less gain since I paid tax on the dividend as I received it.  Again your brokerage firm should be reflecting these amounts in the tax lots view of your account.  If not, they should be able to tell you somewhere.