Avoid Capital Gains Taxes When Selling Your Home

I am not going to tell you how to dress up your home to make it more eye appealing… there are plenty of TV shows to tell you these tips. I have heard horror stories from first-time-home-sellers take the check from selling the home and pay off the mortgage, then buy a new car or furniture for their  new home.

STOP! The moment you spend one penny of profit from the sale of the property you negate your chances of AVOIDING CAPITAL GAINS TAXES! President Obama will raise capital gains taxes from 15% (under Bush) to 20% in 2010.

“Aaron you are telling me to break the law by avoiding taxes?” Wrong, there are ways to legally avoid taxes with real estate. EVADING taxes is knowingly and deceitfully hiding information with the intent to not pay taxes.

“So how do I legally avoid Capital Gains taxes after I sell my home?” After you sell your home you have one year, from close, to roll that profit into your new home. By using Form 1031 you can roll 100% of that profit into a new home and pay 0% interest. This can also be used when flipping properties.  

When flipping a property, simply remember, all the work that you do is still earned income.  There is another way to avoid certain taxes, and that would be to utilize a property that you refurbished and rent it out.  In this current economy, people are loosing their houses and will need a house.  I’ll discuss rental properties and investing in real estate at a later time.

Related posts:

1. 5 Ways to Make Money Investing in Real Estate
2. Creative Real Estate Financing 101 - Part III - Interest
3. Reverse Mortages, Part III - Tax Issues and