IRA/Capital Gains question-Need advice.

[jerseyguy]

Curious about something...I sold my first house end of last year and know I will be hit with capital gains when I get my taxes done. I am self employed (with no employees) and wondering could I offset the gains by opening up a SEP IRA and contributing as much as possible. Not sure if this idea works or not. If not, does anyone else have any tricks up there sleeve to offset capital gains. (Personal reasons stopped me from doing a 1031 exchange this time around) Thanks greatly in advance.

[jmjj215]

In the future, when you have a large capital gain you could possibly sell some underwater stock and buy it back (if you wanted to hold that position still) to offset some ST or LTCGs.

Also, if you open a SEP you will be able to deduct 20% of your SE net profit, so that's pretty sweet - and it would lower your tax bill. It doesn't directly offset capital gains, but it does its job pretty well.