Whether it’s a primary residence or an investment property, there are ways you can sell your property tax-free. As always, please be sure to check with your tax advisor to discuss the details of your sale and to discuss the tax ramifications.
If it’s a primary residence, the IRS allows you to exclude up to $250,000 in capital gains if you’re single, and you can exclude up to $500,000 if you’re married. You have to have occupied the property for at least two out of the last five years for it to be considered your primary residence, though. Also, you don’t need to purchase another property to be eligible for this exemption.
If it’s an investment property, however, you do need to purchase another property in order to sell it tax-free, and you can do so through a 1031 exchange. This allows you to sell your first property and reinvest the proceeds from that sale into the next one, thus transferring your tax liability.
There are certain guidelines you need to follow when doing a 1031 exchange, so if you’d like to know more, just give me a call and I’d be happy to send you the necessary information.
As always, please be sure to check with your tax advisor to discuss the details of your sale and to discuss the tax ramifications