I just sold a house, how can I avoid paying taxes on the gains?
There are two possibilities when selling a home: selling your primary residence or selling a rental property. You can exclude up to $500,000 of capital gains ($250,000 if single) on the sale of a primary residence as long as you meet certain residency rules. The sale of a rental property also incurs capital gains, but the exclusion does not apply. In addition, if you have depreciated your rental property over the years, the total amount of depreciation taken is taxed at your ordinary income tax rate, not the more favorable long-term capital gains tax rates. Of course, there are nuances within each scenario, but the best approach is to talk to your financial advisor before actually selling the property to discuss tax minimization strategies and how to best structure the deal.
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