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Today I have my tax expert with me to discuss some questions you might want to ask your local tax professional about capital gains in investment properties. Craig Thomas of the Thomas Tax Group is here to discuss some of these important questions.
The first thing he always asks his clients is why they want to sell their rental properties. A typical answer is that they need the money. However, there are many other ways to find money, so he always recommends that they look at other options before selling.
He also hears from a lot of his clients that they are tired of their rental properties, and he always suggests a 1031 Exchange, which allows you to trade for another rental of similar or higher value. You can defer your capital gain until you get out of the rental business.
He also hears from people that they simply want to get out of the rental business. He reminds them that they will have to pay a capital gains tax to pay on their net gain from rentals. He usually suggests budgeting 30% of those net gains for taxes.
The 1031 Exchange is a great option for those that don’t want to pay a tax on capital gains. Craig suggests hiring a 1031 Exchange Accommodator to ensure that everything goes according to plan.
Hopefully this was valuable for you. If you have any questions, please don’t hesitate to ask me!
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