Real estate is a common investment vehicle for many investors. When selling any investment property, you want to determine the most tax-advantageous way to proceed. Avoiding or reducing capital gains taxes is a big concern for many investors. In this article, we are going to offer some tips for reducing your capital gains tax burden on your investment property.
Instead of selling your investment property outright and being saddled with the associated capital gains taxes, consider a 1031 exchange. In a like-kind exchange, you can defer all of your capital gains taxes on the sale of your investment property as long as you meet certain benchmarks and follow certain rules. For example, all of your net proceeds need to be rolled into a new replacement property. This benefits the economy, and also your bottom line as it allows you to avoid a tax bill and keep your money working for you over time.
Partial Tax Deferral
If you can’t (for one reason or another) defer all of your capital gains when selling your real property, there is still hope for a partial tax deferral.
Qualified Intermediary Services
At Commercial Partners, we provide qualified intermediary services to clients across the country. If you’re looking to defer your capital gains taxes on the sale of a piece of real estate, a 1031 exchange is the tool for you. Working with a qualified intermediary is the best way to begin your exchange. An intermediary can prepare your required 1031 documents, and answer all of your questions along the way. Reach out to us today to learn more about the 1031 exchange process and how you can benefit.