Everything you need to know about capital gains tax and real estate investment

By: Taro Chellaram /Real Estate Articles/Apr 01, 2022

Everything you need to know about capital gains tax and real estate investment

What Is Capital Gains Tax?

Did you know that, as a property owner, you are expected to pay a percentage of the profit that you earn when you sell your investment? This is what is known as capital gains tax. Capital gains tax is the tax levied on the profits from the sale of investments, if the investment was held for at least a period of one year before being sold. The taxable percentage differs from person to person, as it is calculated based off your taxable income of the year.


Did you know that there is a very high change you are exempt for paying capital taxes? It’s all thanks to something the government did, called Taxpayer Relief Act 1997. This was one of, if not the largest tax reduction law passed by the US government. This act offered relief to college students, parents, small business owners and others new to the investment world through different benefits. This is what an overview of these exemptions looks like to different population categories:


The IRS offers an exemption on the first 250,000 for those who are single and 500,000 for those who are married and are filing taxes jointly. One thing to remember though is that, when it comes to homes, this rule is applicable only towards the primary residence of the owner and can only be allowed once every two years.


According to recent reports by investment advisory companies, “Short-term capital gains are taxed as ordinary income, with rates as high as 37% for high-income earners; long-term capital gains tax rates are 0%, 15%, 20%, or 28%, with rates applied according to income and tax filing status.”


How does the IRS determine which home is your primary residence? It’s quite straightforward – you should’ve lived in that house for at least 2 years over the past 5 years. This means that out of 1825 days, you should’ve stayed at this particular property for 730 days or more. This best thing about this is that these 2 years don’t have to be consecutive!


2022 Long-term Capital Gains Rates
Filing Status 0% Tax Rate 15% Tax Rate 20% Tax Rate
Single < $41,675 $41,675 to $459,750 > $459,750
Married filing jointly < $83,350 $83,350 to $517,200 > $517,200
Married filing separately < $41,675 $41,675 to $258,600 > $258,600
Head of household < $55,800 $55,800 to $488,500 > $488,500
Applicable to the Sale of a Principal Residence

 Another tip for you to be exempt from paying capital gains taxes is to reinvest the proceeds into another property though a 1031 Exchange.

Don’t wait! Start investing in profitable real estate ventures with the help of TC Global and their team of highly qualified brokers and advisors.

Where To Find Real Estate Investment Opportunities In The Current Market

Commercial Real estate investors, looking to maximize profits have set their sights on Texas. The Lone Star State has made a name for its self as a strong market for Commercial Real Estate Investors.

The Ultimate List of Real Estate Terms

We have compiled a list of top real estate words you need to know whether you are a real estate agent or are looking to buy a house or buy a commercial property. This is the real estate lingo you should know.

Rise In Population Is Causing This Real Estate Phenomenon To Take Place In Cypress, Texas!

Population rise causes a rise in need for medical institutes, hospitals and other commercial real estate in Cypress, Texas.

Falling Home Prices? Here's All You Need To Know!

Here’s how you can take advantage of rising interest rates. Advantages of investing during high interest rates are listed below. Invest in real estate today.

Why Grocery-Anchored Real Estate Does Better!

Grocery-anchored shopping centers are on the rise in the retail sector. They are the best investment in commercial real estate. It is low risk and long term.

How is crypto and blockchain changing real estate business and money making?

Cryptocurrency and blockchain technology is changing the real estate business in many ways. Real estate investing has started shifting to a digital and virtual space slowly.

Crypto is changing the real estate industry. Invest in real estate using crypto currency!

With the economic inflation rising, the real estate and financial market is undergoing changes. Crypto currency is the new trend in real estate and in the investment world as more people are using crypto to invest in real estate.

How you can profit from investing in Texas wetlands

Wetlands are profitable investments if done right. Texas has multiple real estate investment options, including wetlands and you can get great returns on investment from them.

What You Need To Know About Closing

Whether you are buying property or selling property, closing is a crucial part that will make or break your deal. We have listed major pointers that will help you deal with your next closing much better.

Late 2022, Early 2023 Market Trends

Real estate investors are keen to invest in real estate. End of year real estate trends and market predictions and trends that can be expected in commercial real estate for 2023.


@ tcgcrealestate

Subscribe Now! IT's Free

Stay up to date with all news coming straight in your mailbox.

Copyright © 2023 TC Global Commercial. All rights reserved.