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Ask Dave

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.
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Taxes Made Easy! 

Taxes Made Easy

Take the stress out of tax prep with our free checklist.

Taxes Made Easy! 

Take the stress out of tax prep with our free checklist.