Under the IRS Section 1031, if you reinvest your gains into a 'like-kind' property within 180 days of the sale, you may qualify for a deferral on capital gains tax.
Is there a way to avoid capital gains tax on the selling of a house?
Avoiding capital gains tax on your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.
How do I avoid capital gains under 2 years?
Capital gains taxes will be paid at the standard rate if you sell before the two-year mark because you won't receive any exemption. To avoid the taxes on a sale of a home, you must use the property as your primary residence for a minimum of two years. Doing so will ensure you avoid any capital gains penalties.
What is the 2 out of 5 year rule?
When selling a primary residence property, capital gains from the sale can be deducted from the seller's owed taxes if the seller has lived in the property themselves for at least 2 of the previous 5 years leading up to the sale. That is the 2-out-of-5-years rule, in short.
How long do you have to reinvest after sale of property to avoid capital gains?
Within 180 days
Frequently Asked Questions about Capital Gains Tax
As long as you sell your first investment property and apply your profits to the purchase of a new investment property within 180 days, you can defer taxes. You might have to place your funds in an escrow account to qualify.
What is the long-term capital gains tax rate for 2018?
Long-term Capital Gains Rate
If your capital gains push your taxable income above $38,600 for single taxpayers or $77,200 for married taxpayers, the overage will be taxed at the 15% rate (or worse). Taxpayers in the middle tax brackets will pay a 15% capital gain rate.