Seasonal Buyer's GuideWhat Snowbirds Need to Know Before House Hunting in Pinellas County This SeasonOwning a home you only live in part of the year works differently than owning a full time
Dated: December 17 2024
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How to Avoid Capital Gains Taxes on Your Real Estate Investments

It's no secret that one of the best growth investments out there is real estate investing. If you want to grow your wealth, investing in real estate is a great way to do it. One of the best feelings in the world is selling a home for more than you paid for it and walking away from the closing with a nice lump of cash in your bank account from a successful real estate investment.
However, don’t forget that the IRS will probably want a piece of those real estate profits (aka Capital Gains). Below we go over what Capital Gains are and how you may be able to avoid paying Capital Gains taxes when you sell your home.
What are Capital Gains Taxes on Real Estate?
Basically, when you sell a home, the IRS will want a slice of the capital gains earned.
Capital Gains are considered to be the difference between what you pay for an asset (in this case your house) and what you sell it for.
The good news is that the IRS does allow a homeowner to avoid paying capital gains taxes up to a certain amount in some cases, thanks to the Tax Relief Act of 1997.
Guidelines for the Capital Gains Tax Exemption:
The property MUST have been your primary residence for 2 of the last 5 years
The Capital Gains tax exemption is allowable only once every 2 years
If you are single, the allowed exemption is up to $250,000
If you are married, the allowed exemption is up to $500,000
You can check for other exceptions and requirements for eligibility on the IRS Website as well
IMPORTANT: It is ALWAYS best to check with a tax professional before selling any property to make sure there have been no changes in the current tax code. Professional tax accountants can tell you which expenses may be deductible on your real estate investments over time as well.
What If I'm Not Selling my Primary Residence?
Are you selling a property that’s not your primary residence and looking for ways to defer Capital Gains taxes?
Then be sure to check out our article on1031 Exchanges to find out how to sell investment properties and defer Capital Gains taxes.
When you work with the right real estate professional (like us!) we have the knowledge and solutions to help you save money and make money on all your real estate investments.
Thinking of buying or selling a home? Call us today at (727) 400-3315 so we can build a custom plan for you based on your real estate investing goals.
Wondering what your home may be worth?
Try our INSTANT home value estimate tool HERE to get started (then call us for a more detailed analysis!).
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