How Do I Offset or Defer My Capital Gains Tax?

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Capital gains tax can undoubtedly be a big nuisance for investors and landlords or anyone else who’s selling an asset. The rates can be as low as 0% or as high as 39.6%, which is certainly problematic. On top of that, you already have other taxes like property tax, sales tax, payroll tax, and income tax.

When you take a look at all of that, it becomes clear that managing to defer or offset your capital gains tax can be very beneficial for your business. Before we take a more in-depth look at how this can be done, let’s first cover the basics of capital gains tax:

Capital Gains Tax Explained

A capital gains tax is there to tax your capital gains, and whenever you sell an asset for more than you originally paid for it, you have to pay this tax.

The government has to get a part of the profit you make when selling an asset, which is why the capital gains tax exists. Naturally, if you buy a property, you won’t have to pay this tax until you sell it for a profit.

Capital gains tax is paid whenever a capital asset is sold, and these are things like stocks, property, bonds, coin collections, jewelry, etc. Things like business inventory and depreciable business property are not included here, even though they are capital assets. What’s more, sometimes you will pay a higher rate, and sometimes a lower one, it all depends on what you’re selling, how much you’re making from the sale, and how long you’ve held the asset.

As you can see, there are many variations, and to keep things as simple and as short as we can, let’s take a look at the specific things you can do to either offset or defer this tax.

How to Offset or Defer Capital Gains Tax

The Bottom Line

As you can see, there are several ways to either offset or defer your capital gains tax on properties. It’s important to take a look at your situation and try to use some of these methods. You can save significant amounts of money by doing that.

Written by

Entrepreneur-Investor-Founder. Posting tips and insights from my experiences in real estate, investing & entrepreneurship- https://www.joekillinger.co/

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