ways to avoid/minimize long-term capital gains tax on an investment property?

Asked by John Lowy, Sunnyside, NY Thu Mar 3, 2011

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Gerard Dunn, Agent, Chevy Chase, MD
Fri Mar 4, 2011
1031 Exchange is a good solution to DEFER your tax and long term capital gain.

Most important in my opinion is to keep a thorough log of improvements made to the property. Unless logged - many of these improvements fall through the cracks over the years. These expenses add to the basis of the property and reduce gains upon sale.

Gerry Dunn
Associate Broker
Serving Maryland, D.C and Northern Virginia
0 votes
Ralph Windsc…, Agent, Hauppauge, NY
Fri Mar 4, 2011
Hey John:
Obviously, you should consult your accountant or a tax attorney but as far as I know a 1031 exchange may work for you - that's where you purchase a similar property with the profit of the sale of your current investment. The only other way I know of would be to make the investment property into your primary residence. Again, as far as I know you have to live in a property at least two out of the past five years to qualify as a primary residence. If you haven't listed the property yet and are not currently working with a real estate agent, I have many properties in Queens and Long Island in my ten years in the business.

Good luck!

Ralph Windschuh
Associate Broker
Century 21 Princeton Properties
0 votes
Russell Arno…, Agent, Las Vegas, NV
Thu Mar 3, 2011
1031 exchange! This is a tax deferred exchange. When you sell the property, "roll" your profits from the sale of the property into the purchase of another property. This is a perfect economic time to utilize the 1031 exchange with prices at historic lows. It's imperative that the intermediary be a solid company, as many escrow / title / intermediary companies have closed their doors in this economy.
If you do not want to purchase another property, talk to your accountant about the many expenses and circumstances that can help minimize tax liability.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Mar 3, 2011
Consider asking your tax professional the question, he/she can best advise on any tax issues.
0 votes
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