How can reinvesting help you avoid capital gains taxes? Jeff Webb and Eliot Thomas of Anderson Advisors answer that question and others about capital gains. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

Is it true that creating a revocable living trust will raise my capital gains taxes if I sell my primary residence vs. if I transfer the house into my name, I must live in it for two to five years to qualify for lower capital gains taxes? If you take advantage of Section 121,You have to live in it for two to five years no matter what. Putting it under the revocable living trust or in your own name, that can be done.

I have sold a real estate transaction in 2022. Can I avoid capital gains taxes if I purchase another real estate transaction in 2022? It depends. If you have already sold it and received the proceeds from the sale, Section 1031 (like-kind exchange) is no longer available or possible.

I am a retired person wanting to give a sum of money to my son. How can I advise him regarding deferring taxes on that inheritance money? You don't have to tell your son anything because he's not the one who has to pay taxes on it. The recipient doesn't have to pay tax. It's the grantor, donor, gift giver that may have to pay taxes on it.

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Resources:

Living Trusts

https://andersonadvisors.com/living-trusts/

Capital Gains and Losses

https://www.irs.gov/taxtopics/tc409

Entity Formation

https://andersonadvisors.com/entity-formation/

Schedule C

https://www.irs.gov/forms-pubs/about-schedule-c-form-1040

Section 121 Exclusion

https://www.irs.gov/taxtopics/tc701

1031 Exchange

https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ

Anderson Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Advisors Podcast

https://andersonadvisors.com/podcast/