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There is an old saying “When There is a Will, There is a Way” And many people definitely have a desire to avoid capital gain taxes when selling investment property.

Tax Loophole: When one kind of investment real estate is traded for another, the capital gains tax is fully deferred.

Generally you’re not actually required to report a taxable gain when business or investment property is exchange for “like kind” business or investment property. The key here is the term “like kind” which refers to the characteristic of the property - NOT it quality. Properties are of like-kind, if they’re of the same nature or character, even if they differ in grade or quality.

Examples of Exchanges:

1. Exchange a rental apartment in the city for a rental home in the country.

2. Exchange a city block for farm land

3. Exchange a rental house for a commercial building.

Note: If cash is received in a tax-free exchange you may have to report & pay capital gains taxes based upon the cash received.

The possibilities & options are many. Imagine trading a rental home with a low monthly cash flow for a commercial building with a higher monthly cash flow, just because the owners want to retire?

The most common type of Exchange is known as the Forward Delayed Exchange. The Taxpayer sells investment property & will acquire a replacement property of equal or greater value within 180 days. There is more. There’re stick stipulations & loads of paper work; you’ll need a real estate professional or attorney that specializes in 1031 Exchanges.

Cassandra Ingraham is a Tax Accountant & Instructor for Basic Tax Classes in the San Francisco Bay Area. During the balance of the year she can be easily found at http://www.taxeswilltravel.com providing Formal Introductions to Lenders for Accounts Receivable Funding (Factoring) & Purchase Order Funding.

There are many people out there who advertise their investment strategies. There is more. They say that you can also make millions just by applying their investment strategies. If you’re a beginner, you may get excited with all the returns that they’re projecting to you… Now, ask this question to yourself, if making money is so easy, will there be poor people around?

When I first started learning about investment planning & financial planning, I was overwhelmed by the terminologies & formulas. I myself did not know that there’re many ratios & formulas that you have to calculate. There’re both quantitative & qualitative. I know for a fact that making capital gains from investment isn’t an easy task.

I then made a special attention on advertisements that claim that they can assist you make money just by following their steps in making your investment choices. I realized that these people are giving you just the basic knowledge on investment. Most of the time, you’ll be taught on how to invest in stocks & shares & forex.

I then ask myself this question, why are they teaching the most complex kind of investment? Well, the answer is very simple; it’s to entice you to join their classes. All these people are teaching you’re dreams. There is more. They teach you what you should do when making an investment, but they forget to tell you the fundamentals of investment.

Which one of these sentences arouses your attention? Make $1,000,000 from forex & shares with these proven steps or learn the risk & fundamentals of forex & shares. As human being, you’ll definitely be more aroused when you see the first sentence. After reading this article, I’m sure that you’ll think twice or two times before signing up for any investment classes.

Nevertheless, I do not say that these classes are scams. I just want to stress to you that that the next time you sign up for any classes, be sure to find out what the class is teaching, is it for beginners, is the lecturer credible enough? My theory goes like this, even Donald Trump can not ’spoon feed’ you with wealth, what makes you think that you can attain financial freedom just by attending the class.

I am sure if you’re committed to create tremendous wealth, you can achieve that wealth. You just have to be proactive & never be complacent. if attending seminars do not help you, you may want to invest in finance related certificates or the equivalent. Be sure to equip yourself with a lot of financial knowledge so that you can achieve your financial freedom day faster & more productive.

Investments are a part of a working person’s life. People invest to save tax & to create a fund for retirement or lean times. Right. When filling tax returns one needs to understand many subtle differences in different kinds of investments. A capital gain is the difference between what you paid for an investment & what you received when it matured or you sold it… If what you paid was more than what you received the transaction become a capital loss. Capital investments are basically money kept in stocks, mutual funds, bonds, real estate, precious metals, coins, fine art, & collectibles.

Most people select to invest in stocks, bonds, & mutual funds through a tax-deferred retirement plans like Individual Retirement Accounts IRA, Roth IRA, & 401 K plans. Right. When such investments grow they’re not taxed but tax deferred until the money is withdrawn. When the plan matures or you decide to withdraw you must check with current tax laws as to what applies when filing your annual tax return.

According to tax professionals every individual must create a system by which they maintain immaculate records of tax investments. There is more. This will become a part of tax return filing systems. You could opt for a system created by experts at http://taxes.about.com/od/capitalgains/a/Cap_Gain_Worksh.htm .

All information pertaining to capital gains or losses must be filled in Form 1040 Schedule D. All fees & commissions paid as well as purchase price must be computed into a single figure known as cost basis. Form 1040 Schedule D is a spreadsheet & has details as well as the sum total of all capital gains or losses.

Tax rules for capital gains vary & depend on many variants such as kind of investment & period held.

For example:

? Short term capital gains are those with a holding period of one year or less. There is more. The tax rate for ordinary tax payers is about 35%.

? Long term capital gains are investments with a holding period of more than one year. The tax rate is five percent for all those tax payers in the 10-15% tax brackets; the rate rises to fifteen percent for tax payers in the 25%, 28%, 33%, & 35% tax brackets.

? For collectibles with a holding period of one year or less the STCG tax rates are 35%. In case of investment in collectibles for over a year the tax rate is 28%.

? In case of small business stock gains with holding period of more than five years the tax bracket is 28%.

? Real estate investments attract different rates based closely on costs & holding periods. For one year or less the capital gains tax is applicable the same as STCG that is 35%. For lots more than a year the tax bracket lowers & varies from 5-15%.

To understand capital investment & gains as well as taxes to be paid one must read the in depth information provided on the IRS website, see: http://www.irs.gov/newsroom/article/0,,id=106799,00.html .

Filing of tax returns or computing of taxes can be made easy if you take the trouble of educating yourself & staying abreast of new developments in tax laws. There is more. The World Wide Web has thousands of articles & tips on taxation & filing of tax returns by finance gurus from all over the world. So get tax savvy by surfing the internet.

Barry Allen is a freelance writer for http://www.1888tax.com , the premier website to find tax, return tax, tax software, free tax filing, sales tax, services tax, income tax, property tax & many more. His article profile can be easily found at the premier Taxes Articles site http://www.1888articles.com/taxes-articles-44_4.html

Capital gains tax taper relief is an very powerful form of relief & can result in significant tax savings.Taper relief was introduced from 5 April 1998. It applies only to individual persons not companies. There is more. This article concerns individual persons only, taxation of corporate bodies is dealt with elsewhere.

There are two types of relief, business asset & non business asset.

Capital gains are calculated by deducting the cost of an asset from the net sale proceeds. Cost can include the original cost of the asset, improvement expenditure & an allowance for inflation known as indexation allowance could be added. Indexation allowance only applies up to 1998 when it was replaced by taper relief.

If the asset was owned on or before 31 March 1982 generally the market value at that date can be substituted for original cost.

Thus the gain to be charged to tax comprises net sale proceeds less the indexed amount of the original cost & indexed cost of improvements. There is more. There’re special rules when assets are transferred between connected persons. Any resulting gain is subject to taper relief.

As a general principle the longer the asset has been held the greater relief available. Business assets attract more relief & accrue faster than non business assets. It’s possible to achieve a reduction in the gain up to a maximum of 75% after only 2 years in respect of a business asset. Generally non business assets, once held for many more than 2 years attract relief at the rate of five percent for each year held up to a maximum of 40%. If the asset was held on 17 March 1998 a bonus year is added.

As business assets attract more tax relief holding them achieves a greater reduction in liability over a shorter period. Business assets consist of assets used for the purposes of a trade carried on by the taxpayer (alone or in partnership) or by a qualifying company or unconnected unincorporated trader. They also include shares held in a qualifying company.

One important area to look at in achieving tax savings is property let for commercial use. Don’t forget that the annual exemption is deducted after taper relief is given. Taper relief seems simple but in reality it’s a minefield. The definitions of business assets have changed many times under the various Finance Acts. It’s necessary to consider the complete period of ownership to determine which rates apply.

Although taper relief can provide significant tax savings it needs to be used with extreme care to make certain relief isn’t under claimed but also to enable maximum advantage to be taken. Like so much of our tax system it’s certainly an area worth seeking qualified professional advice in respect of capital gains tax taper relief.

Copyright ? 2007 Paul Guilfoyle
About the Author:
Paul Guilfoyle is a business professional, a qualified chartered accountant, & business consultant,working in tax consulting,and an internet marketer.All Rights Reserved Worldwide. Reprint Rights: You may reprint this article as long as you leave all of the links active, do not edit the article in any way.

Paul recommends you click for expert advice on Capital Gains Tax Taper Relief

For money making ideas visit:www.win-with-paul-affiliateprofits.com The above is intended as general guidance only & doesn’t constitute advice. The author can not accept any responsibility or liability for loss which may arise from reliance on information contained herein.

Over the years the tax laws have changed with regards to how the sale of your home is taxed. There were once laws that said that you could rollover the profit from the sale into a new more expensive home. There used to be a one time exclusion on the sale of your home if you were over 65. Those laws are now no longer valid & have been replaced by the current law.

The current law states that if you purchase a home, & live in it for 2 out of 5 years, you do not have to pay capital gains (or any other tax) on up to $500,000 gain for a married filing joint couple or $250,000 gain for a single person. In plain English, this means that if a couple purchased a home for $200,000, lived in it for 2 years & then sold it, they could sell it for $700,000 without paying any taxes on the profit ($450,000 for a single person). There is no limit, you can buy & sell a home every two years with the same exclusion.

What if you do not live in the home for two years? There’re three exceptions to the two year rule.

1. Change in Place of Employment. The IRS says that if you, your spouse, a co-owner of the home, or a person whose main home is the same as yours changes employment, you can still take the exclusion. The employment can be a new employer, the same employer or self employment. The new employment must how ever, be at least 50 mile farther from the home you sold than the old place of employment. The change of employment must take place while you’re living in the home.

2. Health. The IRS says that you can claim the exclusion if you have to move because of a specific medical problem. This can be for a parent, grandparent, stepparent, sibling, step sibling, ½ sibling, mother or father in law, aunt, uncle, nephew, niece or cousin. The move must be to obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness or injury. You can not take the exclusion if you move just because it will benefit a persons general health or well-being unless a doctor recommends the change of residence.

3. Unforseen Circumstances. Unforseen circumstances is an event that you could not reasonable have anticipated before you bought & moved into the property. They include things such as natural or man made disasters, act of war or terrorism, death, unemployment (if you qualify for unemployment), divorce or legal separation, multiple births resulting from the same pregnancy or a change in employment that results in the inability to pay your ordinary living expenses. Unforseen circumstances doesn’t cover if you just prefer a different home or your finances improve or you spend too much to maintain a luxurious life style.

Examples:

Employment: Justin was unemployed & living in a townhouse in Florida that he owned & used as his main home since 2005. He got a job in North Carolina & sold his townhouse in 2006. Because the distance between Justin’s new place of employment & the home he sold is over 50 miles, he qualifies for the exclusion of the gain from the sale of the townhouse.

Health: In 2005, Chase & Lauren, husband & wife, bought a house that they used as their main home. Lauren’s father has a chronic disease & is unable to care for himself. In 2006, Chase & Lauren sell their home in order to move into Lauren’s father’s house to provide care for him. Because they’re moving to care for the father, they qualify for the exclusion.

Christopher Anderson wants to share his success as a business owner with others who desire to own their own business. He also believes that the economy is stronger with more business owners, & as a result, He is focused on helping business owners succeed. http://www.lonepeakbusiness.com

Charitable remainder trusts can increase your income, avoid capital gains taxes, lower or eliminate estate taxes, serve as another type of retirement plan, serve humanity & put a warm feeling in your heart. Here is an example that applies to anyone contemplating selling a highly appreciated asset.

In the Path of Progress

Clarence & Mildred had a farm that has been in the family since 1930. They raised corn & had a few cattle. However, the farm has been inactive since Clarence died 10 years ago.

The farm used to be out in the country. Over the years, the neighboring city has expanded to the point that its boundaries have almost reached the farm.

A real estate development firm with an offer she finds hard to believe has recently contacted Mildred. They want to build a giant shopping mall on her property. Moreover, they’re willing to pay 14 million dollars $ for her 80 acres.

As much as Mildred is tied to her home of 40 years & the lifestyle, this is an easy decision. The farm was originally homesteaded & has no basis. How can she reduce the capital gain tax?

The procedure would call for her to gift the farm to a charitable remainder trust. The trust would then sell the property to the real estate developer. She should employ an estate planning attorney to assure that the gift to the trust & the subsequent sale to the real estate developer are not construed as a pre-arranged series of transactions.

Using a charitable remainder trust gives Mildred the following benefits:

1. She does more than reduce the capital gain tax; she avoids it altogether. If the capital gain rate is 15%, this saves $2,100,000 in capital gains taxes. Mary is frugal. She has saved every button that has ever come off a shirt, blouse or shirt. OK. She is also leery. She figures she can put that $2,100,000 to better use than the people in Washington D.C.

2. A charitable remainder trust mandates an annual payout of at least 5%. That’s $700,000 a year. She is set for life & can take all the grandchildren to Disneyland every year.

3. She will get a enormous tax deduction based closely on her charitable contribution to the trust. It will be so big that the IRS will let her carry the unused portion forward for a total of six years. It is a good bet she will pay no income tax for the next six years.

4. She can name any number of charities to receive the 14 million in the trust when she dies. Ultimately, she could have a new church building, a wing on the hospital or scholarships named after her & Clarence for her generosity. The number of people who would benefit in the future is too many to count.

5. If she is concerned about disinheriting her heirs, she can use some of the income to buy a life insurance policy & name her children & grandchildren beneficiaries. So… She could also gift up to (currently) $12,000 per year to as many people as she wants without any gift tax implications.

6. No estate tax will be due at her death.

7. The 14 million will be professionally managed inside the charitable remainder trust. OK. She has no investment worries & can set the trust up so she has a guaranteed income. Downturns in the economy, weather catastrophes or world events will have no effect on her income.

It’s true that Mildred could simply sell the farm & pay the capital gains tax. Aside from the capital gains tax, coming into this large sum of money could create more problems.

She would have to invest it while fending off suggestions from well-meaning relatives. So… She would have some estate planning to do to avoid ½ of her estate going to the government in taxes when she dies.

When you put the charitable remainder trust on the table as an option, most of these problems vanish & many additional benefits appear.

Robert D. Cavanaugh, CLU is a 36-year financial & estate planning veteran & author of the free newsletter, “The Estate Preservation Advisor”. For cutting-edge, easy-to-understand financial planning resources & techniques to increase your income, reduce taxes & preserve your estate & to claim the free video, “How to Sell Your Life Insurance Policy for More than the Cash Value”, go straight to http://theestatepreservationadvisor.com/rd/subscribe.htm