I am not an accountant so you should consult your CPA for details and actual impacts…
But….
I own properties and have looked at Capital gains taxes. Essentially you pay 20% of whatever appreciation you have however there are ways to avoid this tax.
- 1031: You can sell one property and buy another within a period of time and not pay tax. We have worked with clients to manage 1031 exchanges
- Basis Change at death: When owner dies, the basis changes and there might not be any capital gains. Usually combines with 1031 to prevent owner paying taxes now and prevent heirs from paying taxes.
- 2/5 years rule: if you life in your property for 24 months in the last Five years, you can avoid the tax.
Please see attached blog. Most real estate investors have a detailed plan to avoid capital gains. There are more complex options as well for retirement plans.
We can refer you to an expert if you need help.
Mark
Real Property Management Rio Grande
www.rpmriogrande.com
505-292-4765
