How to Avoid Capital Gains on the Sale of a House
- 1). Find a qualified intermediary. The intermediary as your broker and follows certain rules to make sure the transaction is done correctly. Ask your real estate agent or banker for a recommendation.
- 2). Confirm that the property you're selling and the property you want to purchase are business or investment properties. You cannot use property purchased for personal use.
- 3). Confirm that you are buying a property which is of "like-kind." Like-kind property refers primarily to the cost of the real estate purchased. Check with your intermediary to be sure.
- 4). Identify the new property in writing within 45 days after selling the old property. You can do this with a memo to your intermediary.
- 5). Ensure that the new replacement property is purchased within 180 days of selling the old property.
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