Real Estate - 3 Ways to Defer Capital Gains

If you are considering selling your real estate, you may be interested in deferring capital gains taxes on the sale. When you sell a property for a big profit, there is a chance that you will have to pay a large portion of that money to the government in taxes. Therefore, you need to do what you can to minimize or defer the capital gains taxes that you have to pay. Here are a few tips to keep in mind.

Seller Financing

If you use seller financing to sell the property, it can be help you avoid a lot of the capital gains taxes. When you make a large amount of money all at once, your tax bracket for that year will be higher. If you allow the buyer to pay for the property over time, the financial tax burden will be lower.

1031 Exchange

When you sell the property, you can put the funds into a 1031 exchange. This allows you to use the money to buy another property without paying taxes on it. 

Capital Improvements

When you make capital improvements to your property, you can reduce the amount of taxes that you pay on it. As long as you are upgrading or repairing the property, those expenses are deductible.

 

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