When a person makes a significant financial gain through a property they have bought and then sold, they typically owe capital gains tax as a result. Short-term capital gains tax generally applies to property you have owned for more than a year and is subject to higher taxes since the profit made is essentially part of your annual income. If you have owned the property for more than a year, the profit made will be subject to lower tax rates.
It goes without saying the property owners want to find ways to legitimately avoid capital gains tax whenever it is possible. There are several options for real estate investors to successfully do this, but one of the most beneficial applies to your primary residence.
You will be able to benefit from exemptions if the property is your primary residence
If you are an individual, you will be exempt of up to $250,000 of the profit made on your property if it is your primary residence and double this if you own the property along with your partner. However, this will only apply if you have owned the property for at least two years before you looked into selling the property, and it must have been your primary residence during this time. Additionally, you cannot have benefited from a capital gains exemption in the last two years.
There are many other ways that you can avoid capital gains tax, from renting instead of selling your home, to deducting costs from the profits. Make sure that you benefit from the law before selling your home in Florida.