How can I avoid capital gains tax on the sale of rental property?
You can avoid paying capital gains by doing something known as a like-kind exchange (often referred to by its section of the IRS code – 1031). In a like-kind exchange, you find a Qualified Intermediary to trade your property to, and then you identify a replacement property. The Intermediary buys the property on your behalf and trades it to you. The replacement property must be of equal or greater value than the old property. NOTE: QandA’s answer is incorrect.. you do not technically SELL the old property. Once you do that, Capital Gains will be taxable! Doing this type of transaction, you POSTPONE, but never avoid the capital gains. When, one day, you cash out or trade your property for something else, THEN you realize the gain and pay tax on it. If you own a rental property, a like-kind item is any other real estate that is for rent. This includes houses, apartments, condos, office buildings, warehouses, etc. So if you have a rental house, you can “trade” up to a trailer park if you w
