6 Ways to Defer Your Capital Gains Tax

If there is one tax that seems to be a concern for property owners that are planning to sell their property, it is the capital gains tax. This is a tax that is placed on profits that result from the sale of assets such as property, stocks, and bonds. One common attribute to the capital gains tax is that it will take a huge chunk of your profits from the sale on your property.

So your primary object, as a seller, should be to defer or reduce this tax as much as possible. Here are six techniques that you can use to defer or reduce your capital gains tax: 

1. Tax Loss Harvesting

This is where you sell your securities at a loss. The purpose is to offset your capital gains for months, or even years, into the future.

2. Charitable Trust

Giving equity to a charity will allow you to reduce your taxes..

3. Installment Sale

If you except payments for your sale in installments over the course of years. 

4. Deferred Sales Trust

The Trust receives your profits from the sale of your property or assets. Your taxes will be deferred for the duration of the installment note.

5. 1031 Exchange

The 1031 Exchange allows you to defer by exchanging your property for "like kind" property. This typically applies to property only.

6. Structured Sale

This is a type of installment sale that allows sellers to defer any recognition of gains on the sale of real estate.

There are advantages and disadvantages to the above six methods.  It is important that before you utilize any of these deferment methods that you research everything you can about it. Which one you decide to use will be based on your own individual circumstances.