To pay 0% federal capital gains tax, you must have a low total taxable income, generally below $48,350 for single filers or $96,700 for married couples filing jointly in 2025 (including the capital gain). Key strategies include holding assets for over a year (long-term), utilizing tax-loss harvesting, contributing to traditional retirement accounts, and Timing sales during lower-income years.
A common way to defer or reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes on assets while they remain in the account.
To claim this exemption, the capital gain arising from the transfer of the original asset should be used to purchase a new plant or machinery, purchase or construct a building, shift the original asset and its establishment, or incur expenses for other purposes as specified in a scheme framed by the Central Government ...
Here's how you can avoid Capital Gains Tax (legally)? 1/ If the property is your family home (Principal Residence). If you sell your main home, you can claim exemption— but you must use the proceeds to buy/build another family home within 18 months. 2/ Apply for a BIR Certificate of Exemption.
State capital gains taxes
States that do not tax income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming) do not tax capital gains either. Washington state does not collect income taxes but has passed a capital gains tax as an excise (rather than income or property) tax.
Capital gains tax rates
A capital gains rate of 0% applies if your taxable income is less than or equal to: $48,350 for single and married filing separately; $96,700 for married filing jointly and qualifying surviving spouse; and. $64,750 for head of household.
You'll need to add half of your profit to your income for the year. Because your profit was $100,000, you'll report $50,000 as a taxable capital gain. Your personal tax rate is then applied to the total amount of income you reported to determine how much tax you owe.
The simplest way to avoid capital gains tax is to regularly use your capital gains tax allowance (officially known as your annual exempt amount or AEA). How easy this is to do depends on the assets you are selling.
Here's how it works: If you rent out the property, it remains your main residence for up to six years for CGT purposes. If you don't rent it out, there's no time limit, and you can keep claiming the main residence exemption.
If your earnings fall within the 0% capital gains bracket, you could sell brokerage account assets without triggering a tax bill. For 2025, the taxable income limit is $48,350 for single filers or $96,700 for married couples filing jointly.
Second, capital gains taxes on accrued capital gains are forgiven if the asset holder dies—the so-called “Angel of Death” loophole. The basis of an asset left to an heir is “stepped up” to the asset's current value.
How Wealthy Households Use a “Buy, Borrow, Die” Strategy to Avoid Taxes on Their Growing Fortunes
It allowed sellers to claim CGT exemption for the final 36 months of ownership, even if they had moved out. However, this was reduced to 18 months in 2014 and further to 9 months in 2020, which remains the rule today. This general law is in place as it prevents short-term transaction benefits concerning taxation.
Capital Gains Tax 6 Year Rule Explained
To qualify, the property must have been your home before you left. If you sell within the six year exemption period, you can generally claim a full main residence exemption from CGT, provided you have not nominated another property as your main residence during that time.
Avoiding Capital Gains Tax: Strategies to avoid or reduce capital gains tax on real estate include waiting at least a year before selling a property (qualifying for long-term capital gains), taking advantage of primary residence exclusions, rolling profits into a new investment via a 1031 exchange, itemizing expenses, ...
You may owe capital gains tax on any realized gain on the sale of an asset, but not on unrealized capital gains. Long-term capital gains — that is, on assets held for a year or longer — are taxed at a 0%, 15% or 20% rate, depending on your total taxable income for the year.
This tax is applied to the profit, or capital gain, made from selling assets like stocks, bonds, property and precious metals. It is generally paid when your taxes are filed for the given tax year, not immediately upon selling an asset.
The capital gains tax over 65 is a tax that applies to taxable capital gains realized by individuals over the age of 65. The tax rate starts at 0% for long-term capital gains on assets held for more than one year and 15% for short-term capital gains on assets held for less than one year.
Offset gains by making use of allowable losses
If your total taxable gains are still above the CGT allowance after using your current year's losses, you can also use losses from previous years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.
How can I reduce capital gains taxes?
Here are some common examples of tax-free and tax-efficient investments:
Offsetting losses against gains: The most direct way a loss impacts CGT is through offsetting. If in the same tax year, you've sold another asset at a gain, you can offset your losses against these gains. This reduces the total taxable gain.
When you sell your primary residence, $250,000 of capital gains (or $500,000 for a couple) are exempted from capital gains taxation. This is generally true only if you have owned and used your home as your main residence for at least two out of the five years prior to the sale.