Asset Location

Asset location is a term used in personal finance to refer to how investors distribute their investments across savings vehicles including taxable, tax-deferred and tax-exempt accounts (e.g., 401(k), IRAs, ISAs, TESSAs, SIPPs), grantor retainer annuity trusts, generation-skipping trusts, charitable remainder trusts or charitable lead trusts, variable life insurance policies, and foundations. Although the tax rates of different types of income vary internationally, broad conclusions have been drawn about where to locate an asset, depending on the nature and amount of income being generated. Internationally, consideration could also be extended to determining which assets to hold onshore and offshore.

The location of assets is insignificant only when capital gains and losses are taxed on an accrual basis (i.e., no deferral option) and at the same tax rate that applies to ordinary income. Complications arise when comparing tax systems where capital losses can only be applied towards realized capital gains, where capital loss carry-over may not be permitted, and where there are deduction limitations dependant on wealth or income level.