It is possible. You can avoid paying capital gains taxes. In fact, avoiding capital gains taxes is not even all that difficult anymore, thanks to the myriad 1031 exchange companies whose existence is predicated on the ability to avoid paying capital gains taxes. Spectrus Real Estate is one such company.
Although we are not tax advisors, Spectrus can help you avoid capital gains taxes by providing you with a vast and quality array of investment real estate that qualifies as replacement properties when doing a 1031 exchange. More specifically, Spectrus is helping you defer paying capital gains until a time when it is not as costly, such as in retirement.
Why is it important to avoid capital gains taxes? Obviously, avoiding capital gains taxes makes it significantly easier on your pocketbook come tax time. But, avoiding capital gains taxes also makes you a stronger real estate buyer. Let’s look at the following example:
Assume you bought a property a few years ago for $150,000 and have recently sold it for $250,000. This makes your capital gain $100,000. Federal and state taxes combined can be as high as 28 percent of the gain on an investment property (in case it’s not obvious, this is why you want to avoid capital gains taxes for as long as you can). At 28 percent, the capital gains tax on $100,000 would be $28,000. This means you are left with only $222,000 to purchase new investment real estate. However, if you avoid capital gains taxes by doing a 1031 exchange, you would have $250,000 to purchase new investment real estate.
At Spectrus, we pay contractual monthly rental payments of 6 percent to 7 percent on equity. Let’s assume, you buy into one of our properties using your $222,000. Your annual rent payment would be $13,320 to $15,540. Not bad. But it would be $15,000 to $17,500 if you had avoided paying capital gains tax.
Spectrus can help you avoid capital gains taxes. Use our Capital Gains Tax Calculator to give you an idea of how much you might defer.
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