How to Avoid and Defer Capital Gains Tax

Capital gains tax is a levy imposed by the government on the profit earned from the sale of an asset.

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One of the simplest ways to avoid capital gains tax is to hold on to your investments for the long term.

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Invest in retirement accounts such as 401(k)s, IRAs, or Roth IRAs.

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Offset your capital gains by selling underperforming assets at a loss. This strategy, known as tax-loss harvesting.

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Real estate investors can utilize a 1031 exchange to defer capital gains tax on the sale of investment properties.

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Invest in designated Opportunity Zones to defer or reduce capital gains tax on eligible investments.

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invest in Qualified Opportunity Funds, which pool money from multiple investors to invest in Opportunity Zone projects.

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How to Avoid and Defer Capital Gains Tax

Reviewed by Eunice

Capital gains tax is a levy imposed by the government on the profit earned from the sale of an asset.

What is Capital Gains Tax?

One of the simplest ways to avoid capital gains tax is to hold on to your investments for the long term.

Hold on to your investments

Invest in retirement accounts such as 401(k)s, IRAs, or Roth IRAs.

Utilize tax-advantaged account

Offset your capital gains by selling underperforming assets at a loss. This strategy, known as tax-loss harvesting.

Offset gains with losses

Real estate investors can utilize a 1031 exchange to defer capital gains tax on the sale of investment properties.

1031 Exchange

Invest in designated Opportunity Zones to defer or reduce capital gains tax on eligible investments.

Opportunity Zones

invest in Qualified Opportunity Funds, which pool money from multiple investors to invest in Opportunity Zone projects.

Qualified Opportunity Funds

Consult with a Tax Professional