How to Sell Real Estate Without Paying Capital Gains Tax | How to Avoid Capital Gains Tax When Selling Property
If you are thinking about How to Sell Real Estate Without Paying Capital Gains Tax, then don’t worry. Here are some steps to solve your problem. Follow the given steps and solve your problem.
How to Avoid Capital Gains Tax When Selling Property
Steps of How to Sell Real Estate Without Paying Capital Gains Tax
Selling you home is exhausting and expensive enough without the stress of surprise taxes and fees. When putting your house on the market, taxes are inevitable. But there are few strategies that can help you hold on to more of your money.
What is a Capital Gain Tax?
A capital gain tax is a type of fee that is paid by you to the government, when you sell your home, or something else of value, for more than you paid for it. If you bought a house years ago at $200,000 and sold it $300,000 then you have to pay a percentage of your $100,000 profit or the capital gain to the government.
When you make money from selling a house or property, your capital gains tax dependents on whether you lived in the house and how long you lived.
Short Term Capital Gain
In generally you will pay higher taxes on property you have owned for less than a year. This is because short term cap[ital gains are taxed at the same rate as ordinary income. In 2017, the rate between 10 per cent and 39.6 per cent of your profit, but most people pay around 25 per cent.
Long Term Capital Gain
With long term capital gains, you get the benefits of a reduce tax rate that typically does not exceed 20 per cent. If you are selling a residence or investment property you have held on to for at least a year. You have effectively lowered your capital gains tax.
Specific Exemptions for Investment Property
If the value of the one property is grater than the other, you can add cash to the deal. The person who owns the property of lesser value can pay and difference at the time of sale.
If you live in your property for at least two years, it changes the nature of your property from an investment property back to your primary residence. You are then eligible for the capital gins tax exemption.
You move upstate does not have to be permanent. If you want to ultimate move back to the city, stay in your vacation home at least two years. After two years, that property becomes your primary residence, and you can sell it and pocket another tax free profit.