If you’re holding onto a piece of investment real estate, a big factor that goes into determining whether or not to sell is the amount of capital gains taxes you’ll need to pay on the sales proceeds. In this article, we are going to talk about whether or not you need to pay taxes when selling investment real estate.
A Standard Real Estate Sale
In a typical, straight-forward sale of investment real estate, you are responsible for paying capital gains taxes on the sale. Depending on the property in question, its location, and various other factors, this can lead to a sizeable tax bill that often leads sellers to avoid selling altogether.
A Tax-Efficient Alternative
If you’re concerned about your potential capital gains tax burden on the sale of property, a 1031 exchange may be a great alternative to an outright sale. In a 1031 exchange, you are allowed to defer 100% of your capital gains tax burden so long as you reinvest your net proceeds from the sale into a replacement property. This has the added benefit of keeping your money compounding over time in a continued investment.
Commercial Partners Title Company
Commercial Partners Title Company offers a full range of real estate services to clients throughout the state of Minnesota and across the country. We have decades of experience working on all types of commercial transactions. Let us put our experience to work on your transaction. We will walk you through the entire process and make sure you fully understand each and every step. Contact us today to learn more about our services.