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As long as you lived in the property as your primary residence for 24 months within the five years before the home’s sale, you can qualify for the capital gains tax exemption.
You can also deduct state and local property taxes — up to $10,000, combined, for all real estate taxes. ... Moving into your second home can also reduce the amount of capital gains tax you pay ...
If you own a primary and second home, you can only deduct up to $10,000 even if you paid $6,000 in property taxes on a primary residence and $7,000 in property taxes on a secondary residence.
Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, a process known as a 1031 exchange.
Determine your capital gains tax rate. Your capital gains tax rate depends on your income, tax filing status, and how long you owned the property. For 2024, if you have owned your home for over a ...
From 1998 through 2017, tax law keyed the tax rate for long-term capital gains to the taxpayer's tax bracket for ordinary income, and set forth a lower rate for the capital gains. (Short-term capital gains have been taxed at the same rate as ordinary income for this entire period.) [ 16 ] This approach was dropped by the Tax Cuts and Jobs Act ...
In the United States, there are additional tax incentives for home ownership. For example, taxpayers are allowed an exclusion of up to $250,000 ($500,000 for a married couple filing jointly) of capital gains on the sale of real property if the owner used it as primary residence for two of the five years before the date of sale.
Even if you can’t altogether avoid capital gains taxes, the following tactics will minimize your capital gains taxes: Depreciation Deduction The IRS allows rental property owners to deduct an ...