Today I am explaining the requirements for a capital gain exemption and a 1031 exchange.

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In this market, where properties carry a lot of equity, it is important to know everything you can about real estate investments. To help you out, I want to talk about capital gain exemption rules and 1031 exchanges with you today.

To start with, I will explain how capital gain exemptions work.

If you have lived at least two of the last five years in your current home, any equity you have built during that time can be claimed as tax-exempt gains. For married couples selling their home, this amount can go up to $500,000. A single person, on the other hand, can claim up to $250,000. You can even qualify for this exemption if you rented out your home for three of the years, as long as you currently live in the residence.

“If you have already made a capital gain exemption, you can still qualify if you have lived in your current home for two of the last five years.”

So, if you’re thinking about selling, this exemption can save you a lot of money.

And through a 1031 exchange, you can defer all capital gain taxes if you are thinking about selling your current investment property to reinvest the funds into a new one. Of course, this exchange doesn’t apply to primary residences. It must be done with investment properties.

If you have any questions about this, or if you are interested in buying or selling, please feel free to reach out to me. I look forward to speaking with you soon.