The Section 121 exclusion allows homeowners to exclude in capital gains from the sale of their primary residence, if certain ownership and use requirements are met. However, if your gains exceed these limits or you don’t qualify, other strategies exist to reduce or defer taxes. One option is a 1031 exchange, which lets you defer capital gains by exchanging your property for a similar investment property. This strategy is limited to investment properties and does not apply to primary residences. Another approach is harvesting capital losses. If you have underperforming investments, you can sell them at a loss to offset gains, with the IRS allowing up to $3,000 in deductions annually. A Deferred Sales Trust (DST) can be useful for homeowners with significant capital gains. A DST allows you to place sale proceeds in a trust, receiving them in installments over time, which helps spread out and potentially lower the immediate tax burden. When used appropriately, these strategies can help reduce your tax liability and should be discussed with a tax professional.
source: https://capitalgainstaxsolutions.com/how-to-reduce-capital-gains-taxes-when-you-sell-your-home/
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