Capital Gains Tax Real Estate - Save Money When Selling Properties!

Selling Your House? - Don't Pay CGT!

August 1, 2004
Bogdan Voicu

You had to sell a house sometime in your life or at least heard of someone selling one. Regarding the Capital Gains Tax, Real Estate is a domain in which you could win a lot if you know how.

When we talk about Capital Gains Taxes, Real Estate is a very important subject. By its nature, the selling of a house or a building generally involves a large amount of money. Consider 15 to 30 percents from the difference between the selling price and the purchase cost. If it is an older house, this may be quite an amount (tens or hundreds of thousands). It is surely not a sum to let go so easily.

Well, good news: you can keep that amount, in certain conditions. The selling of a property that has been used as a primary residence for at least 2 years in the last five is eligible to an exclusion from paying the CGT. That exclusion goes up to $250.000 tax-free net gain for one person and up to $500.000 for a married couple. More, this is not "once in a lifetime" opportunity. You can do it every two years, with different properties, of course. All you have to do is declare that property as primary residence for those years. The law doesn't say that you have to live in that house for two years; you just have to use it as primary residence. It the law allows it, why won't you use it?

Using this exclusion, you can negotiate a better price for your house and sell it a lot faster. Then, what stops you from even becoming an investor in the real estate business? Buy, sell, buy and sell. A lot did it, why won't you?