Today, we’ll be looking at three ways to help you avoid the capital gains tax:
1. Sell your primary residence for a profit. If you’ve lived in your property as a primary residence for two out of the last five years, you don’t have to pay capital gains tax if you sell it for a profit.
2. Do a 1031 exchange. If you own an investment property and want to sell it in order to buy another one, you can complete a 1031 exchange. When you do this, you can use the profit from the first investment property and roll it into a second one without paying capital gains tax.
3. Inherit property. If you pass your properties on to heirs (or property is passed on to you), capital gains taxes do not have to be paid on the entire profit. Capital gains taxes will only be paid on value increases from after the inheritance of a property.
If you have any other questions on how to save on capital gains, feel free to contact us. If you need help with your taxes, we are also able to put you in touch with an excellent tax advisor. We look forward to hearing from you.