If you’re trying to decide how to increase your capital gains and are interested in investing in real estate Abdo Romeo, the two can definitely go hand in hand. With the proper timing and the help of a tax professional, you can maximize your gains by minimizing and at times, eliminating your tax liability.
If you have realized a capital gain as a result of a property sale, you must first know what your gain is. This can be calculated by figuring the difference between the property cost and the property sale price. You may also deduct the cost of improvements that have been made to the property. Another determinate is the duration of your property ownership. A significant change in the tax rate occurs at one year, so be sure to consult a professional to factor this in.
If you seek to roll these gains into another real estate purchase, it is advised that you consult a qualified intermediary. While this costs more, the intermediary will act as your broker and advocate, ensuring the transaction is dealt with appropriately to realize t tax advantages.
The IRS allows you to roll your gains into a like kind real estate purchase. This is called a 1031 exchange. An intermediary will facilitate this process to ensure you have legally protected your capital gains while not evading tax payments. Generally these exchanges must occur within 180 days, but your intermediary can assist you with that as well.
Be sure to follow up on all necessary documentation and paperwork to keep the transaction legal and be sure to document it properly on all required IRS forms. Timing your purchases and sales correctly can give you the boost to your capital gains without incurring tax liability that will allow your portfolio to exponentially grow. Use a qualified professional and follow all IRS requirements and you will see your wealth balloon in no time.