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How You Can Sell a House and Skip Capital Gains Tax

Monday, September 7, 2020   /   by Stephanie Cornacchione

How You Can Sell a House and Skip Capital Gains Tax





If you’re thinking about selling an investment property, you’ll want to avoid capital gains taxes. Here are three ways you can do that.

 

If you’re a real estate investor and you’re looking to sell a property while also minimizing your capital gains taxes, here are three different solutions that you can explore:

1. A 1031 exchange. This refers to the U.S. tax code that allows a homeowner to sell an investment property and transfer the equity to another one without incurring a tax. It’s a pretty straightforward and commonly used option.

“A charitable trust will allow you to control your assets as a trust manager.”

2. A Delaware Statutory Trust. A DST is less common, but a great tool for homeowners who have an investment property and are looking to end their obligation as a landlord and minimize their risk and exposure. A DST is an entity that has been set up for a large-scale investment where that homeowner can transfer that equity into a smaller position in a large commercial investment. These investment holdings can range from anywhere to a hospital down to a commercial building or land. 

3. A charitable trust. In this particular method, you would sell an investment property and transfer the funds into a charitable trust. This will alleviate a good portion of those taxes and reduce the tax amount you have to pay to the IRS. You would still get to control the remaining portion of the assets while they’re in the trust and there are certain benefits that you get being the trust manager. There’s a legacy component to this as well. You can transfer the value of the asset on to your heirs. This is a great method if you don’t need the income from the property but you are looking to pass on the assets.

If you have questions for me about any of these options or real estate in general, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

Keller Williams
Jack Campbell
12780 High Bluff Drive #130
San Diego, CA 92130
858-240-9900
CA DRE# 01144967

John Schuler
VP of Mortgage Lending
NMLS #76904
2275 Rio Bonito Way, Suite 185
San Diego, CA 92108
Cell: (760) 707-9353
Email: john.schuler@rate.com

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