What options are there in paying capital gain taxes on real-estate investment property?

Question

I am selling 3 acres of land for a substantial gain and would like to avoid paying 30 percent of my selling price in capital gain taxes. Are there tax breaks that allows for reinvesting without taking a big hit in taxes?

Answer 1

Yes, do a 1031 exchange, in which you replace the land that you sold for new land. All you are doing however is merely postponing the tax, not eliminating it.

I have attached a link regarding 1031 exchanges.

By the way, if it's long-term gain, the federal tax rate would be maximum of 15%, don't know about state tax effect as I don't know the state you live in or the state the land is in.

Answer 2

Look into a Section 1031 exchange. That won't avoid the tax bite but will defer it.

If this is a long term gain, the rate is 15% or less, not 30%. If you're closing in on the one year limit for short term gains, hold off on closing until you are over one year. That way it will be a long term CG at the lower rate.

Answer 3

in case you're married, you are able to make $500,000 income and not have any tax legal duty, ($250,000 in case you report single). you do no longer could desire to purchase a substitute sources or one which is extra high priced. The regulation replaced some years in the past using fact maximum of toddler- boomers have been commencing as much as downsize and getting hit with extensive tax expenditures. apartment residences are a diverse tale. you will could desire to pay cap effective factors except you elect to a sec 1030 substitute. extremely you have 40 5 days after the sale to "elect" your substitute sources and 6 months to close. seek for suggestion from a tax expert for further information and that may assist you interior the direction of the divorce.

Answer 4

1031 exchange

if not, better to sell now and take the hit before the dems raise cap gains taxes.