Capital Gains for Real Estate: A Comprehensive Guide

Understanding capital gains for real estate is crucial for anyone selling property. Capital gains occur when you sell a property for more than its original purchase price, with profits subject to tax. Homeowners may qualify for a $250,000 or $500,000 exclusion if the property was their primary residence for at least two years. For real estate investors, strategies like a 1031 exchange allow you to defer capital gains taxes by reinvesting in another property. Knowing how capital gains taxes work can help you reduce your tax liability and maximize your real estate investment profits.