How to Prevent a Tax Hit When Selling a Rental Property

Investing in rental properties can generate steady income and significant profits upon sale, but it may also lead to substantial capital gains tax liabilities. In 2024, the capital gains tax rate is 15% for married couples with taxable income between $94,051 and $583,750, rising to 20% for higher incomes. Strategies to minimize these taxes include tax-loss harvesting, utilizing IRS Section 1031 for like-kind exchanges, and converting rental properties into primary residences to exclude up to $500,000 in gains. Consulting a tax professional is advisable for tailored guidance.