{"id":814,"date":"2019-03-13T18:39:11","date_gmt":"2019-03-13T18:39:11","guid":{"rendered":"https:\/\/taxreliefprofessional.com\/?p=814"},"modified":"2023-09-26T22:23:03","modified_gmt":"2023-09-26T22:23:03","slug":"selling-property-heres-how-to-avoid-paying-capital-gains-tax","status":"publish","type":"post","link":"https:\/\/taxreliefprofessional.com\/tax-debt-relief\/selling-property-heres-how-to-avoid-paying-capital-gains-tax","title":{"rendered":"Selling Property? Here’s How to Avoid Paying Capital Gains Tax"},"content":{"rendered":"\n

In 2014, federal tax revenue in the US exceeded $3 trillion<\/a> for the first time in history.<\/p>\n\n\n\n

That same year, nearly $140 billion<\/a> was paid out in capital gains tax. This was also the highest figure that had ever been collected.<\/p>\n\n\n\n

Taxes are important to keep our country running. But capital gains tax can have a serious impact on your own personal financial situation. The good news is that there are ways around it.<\/p>\n\n\n\n

So read on as we take a look at how to avoid paying capital gains tax.<\/p>\n\n\n\n

What Is Capital Gains Tax?<\/h2>\n\n\n\n

Capital gains tax is a payment you make to the government when you sell an asset for more than you paid for it.<\/p>\n\n\n\n

The most common example is selling your house. If you bought it for $200,000 and sold it for $300,000, you’ve made a capital gain of $100,000. And the government wants a piece of it.<\/p>\n\n\n\n

As well as real estate, it also applies to other assets such as automobiles and stocks and bonds.<\/p>\n\n\n\n

How Much Do You Have to Pay?<\/h2>\n\n\n\n

The amount of capital gains tax that you will be liable for depends on a number of factors.<\/p>\n\n\n\n

But one of the most important is how long you have held the asset for. Depending on how recently you bought it, you will either be liable for short or long term capital gains.<\/p>\n\n\n\n

Short Term Capital Gains<\/h3>\n\n\n\n

Short term capital gains are taxed at the same rate as your other income.<\/p>\n\n\n\n

So if you sell an asset within twelve months of buying it, any profit you make on it will incur capital gains tax at your ordinary tax rate<\/a>. This will be somewhere between 10% and 37% depending on your other earnings.<\/p>\n\n\n\n

The twelve-month cut off starts from the day after you purchase the asset up to and including the day that you sell it.<\/p>\n\n\n\n

Long Term Capital Gains<\/h3>\n\n\n\n

If you hold on to an asset for more than a year, then it will fall under long term capital gains.<\/p>\n\n\n\n

The maximum you will pay for long term capitals gains tax is currently 20% and you need to have a taxable income of well over $400,000 to reach that bracket. For the vast majority, the rate will be 15%. And for those whose taxable income is less than $39,375 for a single filing, you won’t pay any capital gains tax at all.<\/p>\n\n\n\n

How to Avoid Paying Capital Gains Tax<\/h2>\n\n\n\n

If you’re concerned that capital gains tax could leave you with a hefty sum to pay, there are steps you can take.<\/p>\n\n\n\n

These are perfectly legal ways to reduce the amount of tax you will have to pay. You may even be able to remove any capital gains tax liability at all.<\/p>\n\n\n

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\n Evaluate your tax situation\n <\/h2>\n

\n By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.\n <\/p>\n \n \n\n\n

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