Minimizing the Cost of Selling Real Estate

Q. I am selling 2 acres of land. How do I avoid paying taxes on it? Help Please.


A. You are only taxed on the gain from the sale. So if you paid $10,000 for the land and sold it for $20,000, the profit of $10,000 will be subject to capital gains taxes. The capital gains tax rate will either be 10% or 15% depending on your income level.

The only way to push those taxes down the road is to 'exchange' that property for another. This is called a 1031 Like-Kind Exchange. There are a lot of rules about doing this and it needs to be put into place prior to the closing of your land.

Take a look at the article on my website called "Exchanging Real Estate Tax-Free". It will answer many of your other questions regarding taxes on the sale of real estate.

Your posted comments on this and other questions are welcome.
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