Could this one idea save you $40,000?
More than Money with Gene Dickison Answers:
“Could this one idea save you $40,000?”
It depends . . . are you planning to sell some real estate with $200,000 of profit (or more)?
Depending on your tax bracket, if you realize a $200,000 gain on the sale of some real estate your income tax bite will be $40,000. Ouch.
Is there no way ‘around’ this?
Is there no loophole?
Well – kind of.
If you employ a well established piece of the IRS tax code you would elect a 1031 exchange (‘exchanging’ the property you no longer want for one you would like to own) and defer the entire $40,000 tax bill.
Defer means the tax bill did not go away, but you don’t have to pay it until later. When is later? When you sell the second property.
Unless, of course, when you decide to sell the second property, you use a 1031 exchange to defer that tax bill. And so on and so on and so on.
Be sure to use an experienced real estate attorney to asset you. 1031 exchanges are very useful and very complicated. Every t must be crossed and every i must be dotted. But to save $40,000 or more – you might very well find it worth the effort.
Do you have investment profits? Would you like to defer the tax bill?
© 2015 More than Money and Gene Dickison