If you’ve ever sold a piece of real property, you’re likely familiar with capital gains taxes. In this article, we are going to talk about capital gains taxes – when you owe them and when you’re exempt from them.
Capital Gains Taxes on Real Estate
Capital gains taxes are taxes imposed on the sale of certain assets – such as real estate. When you sell real estate in a standard transaction, you will owe capital gains taxes on that sale.
Defer Taxes with a 1031 Exchange
If you want to avoid a big capital gains tax windfall when selling real estate – a 1031 exchange is your ticket! Like-kind exchanges allow you to defer your capital gains taxes on the sale of real property. In order to defer your taxes, you need to redeploy your sales proceeds into a new (bigger) replacement property, and meet various other requirements set out by the IRS. When done correctly, a 1031 exchange can help you avoid a huge tax hit. The biggest benefit is that you can keep your money working for you in a continued investment – building wealth over time.
Exchange Your Like-Kind Property
Like-kind exchanges can get complicated quickly. That’s why it’s important to work with a skilled intermediary on your exchange. The qualified intermediaries at Commercial Partners can help you through every stage of your exchange. We can advise you on replacement property, prepare your closing documents, and answer all of your questions. Give us a call today to set up a time to chat about your exchange. Our main office is in downtown Minneapolis, but we work with clients throughout the United States.