There... Now that the disclosure is out there that you should not take tax or legal advice from me, I'm going to tell you some things you need to know, or ask your CPA about, within the real estate world.
How to avoid paying capital gains when you sell your house.
If you sell real estate for more money than you paid for it, it is considered income. That income is called capital gains. Capital gains = The Net (the price you sold it for minus expenses) - The basis (price you paid). You are then taxed on this gain based on a short (less than 1 year) or long-term (more than 1 year) holding.
Here's an example:
Chase bought a property in 2013 for $200,000. He sold it in 2018 for $300,000. He spent $18,000 on commission to a real estate agent and another $20,000 fixing it up before the sale. Chase's gain is $62,000 ($100,000 - $18,000 -$20,000). He will be taxed at the long term capital gains rate on $62,000.
If Chase's property was his primary residence for 2 of the past 5 years (he lived in the house), Chase is EXEMPT from paying capital gains!!!
This means Chase made $62,000 FREE AND CLEAR! Even if you hit the jackpot on a slot machine for $62,000 the IRS gets a cut!!!
Here's the best part: You can do this over and over and over again, LEGALLY
This allows Chase to buy his next home, fix it up and make improvements over the next 2 years, then sell it for a profit TAX FREE again.
Author:Chase Walseth Phone: 727-755-3830 Dated: January 28th 2019 Views: 146 About Chase: ...
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