How to pay less capital gain tax ?

Question

If not doing 1031

Danny Randazzo · Answer

@David Smith invest your gains into your business so you don't have a profit then speak to your CPA about the best tax strategies then implement the strategy with your new business generated off your investment

Jason D. · Answer

@David Smith live in it for 2 years, or rent it for a year then sell. Otherwise, you have to pay the piper

Melody E Bergloff · Answer

@David Smith @Jason D. @Greg Dickerson @Bjorn Ahlblad

There is no magic bullet answer per se to this question. However, given the amount of gain (i.e. $200K), the two best tax strategies would be to convert the property to a primary residence and/or working with with a tax professional that can help you maximize your deductions.

If you are filing single, you have $250K capital gain exclusion for selling your primary residence. Also, there are probably deductions you may be missing (i.e. depreciation).

Greg Dickerson · Answer

@David Smith You can invest in an opportunity zone fund and reduce gain by 15% and pay no taxes on profits from the investment after 10 years.

Jonathan R McLaughlin · Answer

@David Smith or buy something else outright around 1M. Cost segregation for the new asset and take advantage of the combined first year depreciation/closing costs etc. you will drive your tax rate down to something you might find more palatable.

If you have other properties, good time to do some big ticket items.

I wouldn’t make a bad 1031 deal if I could drive down that tax obligation....

Ola Dantis · Answer

@David Smith

You should check a book: Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes.

You can learn some other tips and tricks.

David Smith · Answer

Will do 1031.  Tax is too damn high

government will take the profit if people not planning it.

Robin Frazier · Answer

@David Smith

You really need to speak to a tax professional.

You could offset it with depreciation from other properties.

Nigel Guisinger · Answer

The best way to mitigate any tax gains is to meet with your CPA prior to the sale of the asset with the gain and game plan in advance. There are many ways they can mitigate your gain based on the specific circumstances of that deal in combination to your yearly and overall financial goals. I know this sounds like a disclaimer and not as advice but the Limited information you gave with this, makes giving solid advice difficult to give. If you’ve missed The 1031 window your next move should be to look into opportunity zones but you will have to inject move to upgrade the property in most cases. But at this point I’d be reaching out to my CPA.

How to pay less capital gain tax ?

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