No one enjoys paying capital gains taxes when selling real estate. Thankfully, there are several tools available to US taxpayers for deferring or avoiding these capital gains taxes. In this article, we are going to discuss a few ways to avoid capital gains taxes on the sale of real estate.
1031 Exchange
Perhaps the best tool for avoiding capital gains taxes is the 1031 exchange. Under section 1031 of the Internal Revenue Code, a taxpayer is able to defer their capital gains taxes on the sale of real property so long as they roll those proceeds into a bigger property. There are numerous other benchmarks that need to be met, but when done properly, a 1031 exchange can result in 100% capital gains tax deferral.
Alternative Options
If, for some reason, you can’t do a 1031 exchange on your property, you still have some potential alternative strategies, including:
Claiming a Principal Residence Exclusion
Deferred Sales Trust
Gifting Property
Defer Your Capital Gains Tax
If you are looking to defer your capital gains tax on the sale of real estate (and who isn’t), consider a 1031 exchange. At CPEC1031, LLC, our qualified intermediaries have more than twenty years of experience helping taxpayers across the country with their real estate exchanges. We can help you through every step of the exchange process – from start to finish. Reach out to us today to set up your 1031 exchange and defer your capital gains taxes.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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