How Do You Avoid Capital Gains Tax?
• Use a like-kind exchange on property worth more than the depreciated value. If you sell property for more than the depreciated value, you will pay capital gains tax on the difference between the depreciated value and sale price. However, you can use a like-kind exchange at the higher value of the property to avoid capital gains tax. For example, if you have used equipment worth $5,000, but the depreciated value is only $3,000, you can trade it in for $5,000 to buy new equipment, instead of selling it outright and paying capital gains tax on the $2,000 difference. • Qualify to exclude capital gains on the sale of residential property. You must meet the following requirements of the ownership test and the use test in order to exclude up to $250,000 in capital gains as a single filer or $500,000 as a joint filer: • You owned the residential property for a minimum of 2 years. • You occupied the property as your primary residence for at least 730 days (2 years), which don’t need to be con
