About Capital Gains

It’s great to profit when selling a property, but you’ll want to consider the tax consequences, too.

What are "capital gains"?

A capital gain (or loss) is the profit or loss you make when you sell real estate (or other assets).

Why do I need to know this?

Capital gains may be taxable. If your sale may generate a taxable profit, you may be able to make changes before selling that will allow you to minimize or eliminate the taxes.

Can I sell my property tax free?

If you sell your personal residence and the profit (capital gain) exceeds a certain amount, the excess is subject to tax. If selling an investment property, the entire gain could be taxable.

Can I reduce or eliminate the tax?

There are strategies for minimizing or even preventing the tax. We have several specific, sophisticated techniques for eliminating, reducing, or defering taxes.

How do I determine my capital gain

To determine your gain/profit, add or subtract as shown here:

+ Selling price (i.e. the contract price)

- Costs to sell (i.e. closing costs, commissions, taxes, credits to buyer)

- Purchase price you paid (i.e. the contract price)

- Costs to acquire (i.e. closing costs, loan fees, taxes)

- Cost of long-term improvements (i.e. new windows, not maintenance items)

= total capital gains (or capital loss, if negative)

- your exclusion: $250,000 (single) or $500,000 (married)

= taxable gain

x tax rate (State + Federal)

= the tax you get to pay

How about "capital losses"?

Unfortunately, there is no tax break if you lose money when selling your personal residence. For investment property, you may deduct the loss.

Important disclaimer: This is general information, not tax advice. Federal and state tax laws change frequently. We are not tax or legal advisors. Please consult a qualified tax or legal professional before acting on anything described here.