I wanted to run through someone else an idea on how to avoid dividends on ETFs.
Let’s assume I invest 100k USD in ETF that pays dividend twice a year of 1% (each). So twice a year I get 1000 USD. That is obviously taxable. Let’s assume 20% - so taxman wants 200 USD.
But usually ETF’s drop by that 1k on dividend ex-date.
What if I sell that ETF day before ex-date and immediately buy another one (let’s assume ideal replacement, TER and so on). And on ex-date I switch back (or not to save on transaction cost).
Now there was no dividend payment to me, so no taxable income.
Is there a hole in my thinking? Or perhaps that is already foreseen in tax law and illegal?