Mortgage Lending Library
Capital gains refers to the profits made by selling your property. While there is certainly nothing wrong with making money and profit, capital gains taxes certainly take some of the joy out of your deals. If you are interested in real estate investing, or if you just want to sell a non-primary residence (such as a vacation home, secondary home, or investment property) capital gains taxes may affect you. To take the bite out of capital gains taxes, the secret is to talk to a financial advisor before you sell. Find an accountant or financial professional who has experience with capital gains and discuss your situation with them. This professional may be able to help you reduce capital gains taxes in your case or may be able to suggest ways you can avoid capital gains entirely. For example, you are not charged capital gains taxes in many cases is you use the proceeds from the property sale in specific ways (to buy a primary residence, for example). Your financial professional may be able to make suggestions based on capital gains tax exemptions that can help you. In some cases, you may not be able to avoid paying capital gains taxes entirely. In these cases, the name of the game is to reduce, as much as possible, the taxes you pay. You need to begin by finding out how much in taxes you will have to pay and then planning ahead. If you know you will pay more, you may want to ask more for a property or look to profit from a property more so that you still come out ahead. This is especially important if you have plans for the money you will get from your property sale and do not want to get caught short. Even though capital gains taxes are a reality for many people who want to sell a non-primary property, these taxes should not stop you from real estate investing. Even with capital gains taxes, you can profit from properties. Having good professionals on your side who understand capital gains issues is one of the best ways to ensure that you do not pay too much in taxes. Being aware and prepared for capital gains taxes can prevent unpleasant surprises after a property sale.