One of the most frustrating aspects of successfully investing in property is being subject to capital gains tax as a result of a lucrative sale. However, if adequate research into the law is conducted, it can be possible for those in commercial real estate to legally avoid taxation.
There are several ways to avoid capital gains tax, but the best option for you will depend entirely on your situation. You may even be able to incorporate several of these taxation loopholes to maximize your benefit.
Take advantage of primary residence exclusion
Your primary residence can help you to reduce the capital gains tax that you will be subject to. The amount that can be excluded stands at $250,000 for an individual and $500,000 for a married couple. You can maximize this advantage by frequently moving homes.
Benefiting from the 1031 exchange
If you have recently sold commercial property that was leased or used as an investment, you will be able to avoid capital gains tax on the sale if you reinvest the money within 180 days.
Reduce your taxes by making gifts
If you are burdened by a high tax bracket, you may want to gift some of this property income to family members who are in a lower tax bracket. This will help you avoid losing profits to high rates of tax.
If you want to reduce the taxes you face as a commercial real estate investor, it is important to look into the way the law works in the state of Florida. By doing so, you will be able to uncover some lucrative tax avoidance strategies.