Every taxpayer may not want to completely avoid taxes, because doing so may come with strings attached. However, lowering them to a point where they are reasonable, predictable and easy to pay. This is especially true with the sale of property. Whether it is real property or securities, every taxpayer wants to minimize capital gains taxes when they sell property.
For the uninitiated, capital gains taxes are additional fees that are paid to the government after the sale of property results in a profit (or windfall). However, there are certain situations where capital gains can be realized without having to pay such taxes. This post will highlight a few fine points for those seeking to reduce their tax burden.
Property must be owned for at least one year – Essentially, you must own the property you seek to sell for a profit for at least 12 months in order to take advantage of the possibility of paying no taxes.
Your income must qualify for the tax break – If your income falls within the 10 percent or 15 percent tax rate, you may qualify to avoid capital gains taxes. To put this in perspective, the 15 percent tax bracket tops out at $37,450 for a single filer, and $74,900 for married filers. However, you must keep in mind that these income amounts are taxable income, not gross income. This means the income that is left after all deductions are considered and subtracted from one’s gross income.
If you have further questions about reducing capital gains taxes, an experienced tax lawyer can help.