How do minimize capitol gains taxes?

Question

We have the potential to purchase some commercial real estate and already have a buyer. How do we minimize capitol gains taxes?

Answer 1

Capital gains can be deferred by rolling the proceeds over into a similar property. ~

Answer 2

You can defer the tax bill with a like kind exchange.

But it sounds like you're doing a double escrow. If so there's no way to minimize the gain as it will be a short term gain and will be taxed as ordinary income. The only way to reduce the tax bite will be to forego profits. That would just be dumb as the tax rate would have to be over 100% for that to save you any money.

Reinvesting the proceeds won't save you a dime, that rule was tossed over a decade ago.

If you have any capital losses, those will offset the gain you realize on this deal though. It doesn't have to be other business property as another poster alluded to. Any capital loss will do. If you have any dog stocks that you've been hanging on to, now would be an excellent time to dump them and use those losses against the gain on this transaction.

Answer 3

Several options - Like-kind exchanges, investing in the property before you sell it to increase its basis (ie capital improvements), sell other business property at a loss to offset the gain on the new property you just acquired.

Answer 4

Whatever he said -- but I recommend taking to a tax consultant like H.R. Block or a lawyer in person than trusting us screen names and avatars.