With the home buyer credit in place helping individuals get in properties, you may be wondering if there are any ways to get around paying capital gains taxes on your rental property when you’re ready to get out.
If you’re selling your property, you probably know about 1031 exchanges, which enable you to sell your property (rental properties included) without paying capital gains taxes. Once you sell the property, the money goes into a trust where you have 180 days to reinvest the money into a new property. So if you sold an investment property, you would have to buy another investment property to make the 1031 exchange work.
You should most definitely talk with your financial advisor and accountant about 1031 exchanges, as we they are most qualified to ensure you don’t violate any IRS rules.