These two methods will exempt you from paying capital gains.
How do you not pay for capital gains? Before I respond to that question, let’s first define what capital gain is. In a nutshell, it’s what the government taxes on passive income. If you don’t want to pay capital gains, check out some of these situations in real estate where you can be exempted from paying it:
1. Sell your primary residence and receive a gain of $250,000 profit if you’re single, or get $500,000 profit if you’re married and filing jointly, without having to pay capital gains taxes. Profit here means what you paid for your home, plus any improvements you made. However, to qualify for this, you must have lived in your home for the last two years out of the last five.
"Profit means what you paid for your home, including any improvements you made."
2. If you have a rental property, you can do a 1031 exchange, which is a tax break that encourages people to keep their money in real estate. You can sell your rental house and use the money to buy more real estate within a certain period of time.
These two methods will keep all of your profit in your pocket instead of giving it to the government. If you have more questions about this topic or anything real estate related, call or email me. I’m always happy to help!
