Capital Gains Tax?

How does capital gains affect selling real estate?

QUESTION: Dean has owned a property for four years and it is not his personal residence. If he sells it, what type of taxes would he pay?

ANSWER: If it's not your personal residence, you would pay 15 percent on the gain. If you made $50,000 on the sale, you would pay $7,500 in taxes. If you want to re-invest the money, you have to do it using a tax-deferred 1031 exchange, and you have to do a very specific process when you're selling it.

If you want to sell the property and upgrade your house, that's a good idea because the money would grow tax-free, because if you do that, you can make up to $500,000 on your personal residence, married and filing jointly, without paying any taxes.