When you sell a piece of investment real property, you have several options to consider when it comes to capital gains taxes. In this article, we are going to outline some of your options for dealing with capital gains taxes when selling investment real estate.
Pay the Capital Gains Taxes in an Outright Sale
The simplest and least tax-advantageous option at your disposal is to simply sell the investment property in an outright sale. This is often the easiest method, but it triggers a capital gains tax burden that can be quite hefty depending on the details of your transaction.
Defer the Capital Gains Taxes via a 1031 Exchange
If you want to sell your investment property but are hesitant to pay a large capital gains tax bill, then a 1031 exchange may be the best option for you. A like-kind exchange is often the most tax-advantageous method for selling investment real estate as it allows you to defer your capital gains tax burden so long as you reinvest all of your net proceeds from the sale into a like-kind replacement property.
1031 Exchanges – Great Vehicles for Tax Deferral
1031 exchanges are great vehicles for tax deferral when selling real estate that qualifies for like-kind exchange treatment. Before you begin the process, you need to make sure that your property is a good fit for a like-kind exchange. A qualified intermediary is an excellent resource who can answer all of your questions about 1031 exchanges and help ensure you can defer 100% of your capital gains taxes. CPEC1031 intermediaries have more than two decades of experience doing just that. Reach out to us today at our downtown Minneapolis office to learn more about how we can help you through the 1031 exchange process.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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