8 Ways to (Legally) Beat Capital Gains Taxes

Real estate investors are particularly affected by capital gains tax rates, given they must pay capital gains taxes on profits from real estate held longer than one year.

Capital gains taxes are on long-term profits from investments, such as sales of real estate and stocks, and dividends. “Long-term” is defined by Uncle Sam as being held for at least 366 days; gains from assets owned for less than a year are taxed at the normal income rate, the maximum rate of which rose in 2013 from 35% to 39.6%.

As of tax year 2013, long-term capital gains tax follows a bracket system, where people earning different amounts of money pay different tax rates on capital gains. Single filers making less than $36,250 and married filers earning less than $72,500 pay 0% capital gains tax, while single filers making $36,251-400,000 and married filers earning $72,501-450,000 pay 15% capital gains rate. Singles earning more than $400,000 and married couples earning more than $450,000 pay a higher 20% capital gains tax rate.