I had a question if anyone had any suggestions. We purchased a second home June 27, 2020 in Vermont. We had planned to use it for ourselves and airbnb, however, I just got a job offer in Washington state and our cabin needs too much for us to try to do being across country and we'd like to use that money for a down payment in Washington. Is there anyway to get out of paying the capital gains or at least make it a lot less. Very new to real estate and did not see this coming and I'm getting really confused with what I have read online, ranges being 2.5%-10% of cost of the gains.
Any help would be great, thank you!
I'd speak with a tax attorney, but a 1031 exchange should fix this problem.
yes a 1031 Exstange would serve the purpose for avoiding capital gains. I have done this before. There are several rules in conducting one. One would be that you will need to hold the property for attest 1 year prior to sale. You also will need a qualified intermediate to conduct the exstange.
@Marissa Bialek , LIke everyone mentioned, this is a perfect situation for a 1031 exchange. You won't be able to use the proceeds for a down payment for a new primary. But the 1031 will allow you to move that property with you to a new investment property in WA and avoid paying tax on the gain.