Selling Your NYC Home? Here’s How to Reduce Your Capital Gains Tax (Part 2)
Last week, we covered key ways to reduce capital gains tax when selling your NYC home. This week, let’s dive deeper into advanced strategies that can help you keep more of your hard-earned profits.
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1. Convert Your Investment Property into a Primary Residence
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If you’ve rented out your property but are considering selling, moving in for at least two years before selling could help you qualify for the $250,000/$500,000 primary residence exclusion. This won’t eliminate all capital gains taxes, but it can significantly reduce them.
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2. Timing Your Sale for Maximum Tax Benefits
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Selling your property in a low-income year (such as after retirement or during a year with reduced earnings) could place you in a lower capital gains tax bracket. If possible, plan your sale around your overall financial picture.
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3. Gift or Inherit Instead of Sell
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If your goal is to pass on wealth, gifting a property to a family member (under IRS gift tax limits) or allowing heirs to inherit it could be more tax-efficient. Heirs receive a step-up in basis, meaning they only pay tax on gains from the date of inheritance, not the original purchase price.
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4. Charitable Remainder Trust (CRT) Strategy
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If you have substantial gains and a charitable interest, donating your property to a Charitable Remainder Trust can defer capital gains taxes while providing you with income from the property’s sale over time. This is a niche but effective strategy for high-net-worth sellers.
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5. NYC & NYS Tax Considerations
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New York’s capital gains tax can be steep, but working with a tax advisor can uncover additional deductions and credits. If you’re selling a second home or investment property, ensure you’re factoring in the 10.9% NY state capital gains tax and NYC’s 3.876% tax.
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Need Expert Advice on Selling? Let’s Connect!
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Selling in NYC comes with unique challenges, but with smart planning, you can minimize your tax burden and maximize your profit. Whether you’re selling a condo, co-op, or investment property, I can help you strategize for the best outcome.
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Let’s discuss your goals—reach out today!
Warm regards,
Eli Haliva
Associate Broker, Douglas Elliman
?? 917-627-5677