Preventing Capital Gain Taxes when you sell your San Carlos CA home is the quest here. So, your home went way up in value, which is great, but you can’t stomach the amount of capital gain taxes you’d have to pay if you sold it? Well, there is a little trick under the 1031 exchange rules which allows you to circumvent having to pay those taxes!
Visit https://sancarloslife.com/tax-exemptions-when-selling-your-home to learn how to calculate your capital gain taxes.
What is a 1031 [Stark] Exchange?
A 1031 Exchange is when you sell one investment property and buy another investment property. The IRS allows the investor to purchase the next property and not have to pay any capital gains from the sale of the first property. So, it’s a method used by investors for preventing capital gain taxes coming due! Now there are very specific rules to follow for a sale and purchase to qualify as a 1031 exchange, so seek professional advice before embarking on this journey!
So, what does this mean to you? You’re not an Investor!
If your goal is preventing Capital Gain Taxes when you sell your San Carlos home, then you might just want to temporarily become a real estate investor! So here is the trick under the 1031 rules that could allow you to sell your San Carlos CA home and buy another while preventing capital gain taxes. It goes something like this:
- Find a rental for yourself and move into it.
- Rent your current primary residence for two years, then sell it.
- Buy a replacement home under the 1031 timing and other rules
- Rent out the new house for 2 years, then move into it as your primary residence.
So, this would mean living in a rental for about 4 years, but it should result in you paying zero capital gains taxes when you move into your new home 4 years later. You can purchase your new home anywhere in the U.S. Please consult a tax professional to verify this process and whether the rules may have changed when you’re ready to sell your home.
To learn more about 1031 Exchanges visit https://www.ipx1031.com/the-tax-deferred-exchange/
To learn more about the author visit: https://sancarloslife.com/best-realtors-in-san-carlos-ca/
To find some of the best real estate agents in San Carlos CA visit https://www.vabrato.com/about-us/