States with no capital gains tax
A little more than a handful of states have no capital gains tax. Those include Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, and Wyoming. It's no coincidence that these eight are also states without personal income tax.
Countries like Switzerland, Singapore, the Cayman Islands, Monaco, New Zealand, Belize and Hong Kong have no capital gains taxes. This makes these countries attractive to investors and entrepreneurs.
A capital gains rate of 0% applies if your taxable income is less than or equal to: $47,025 for single and married filing separately; $94,050 for married filing jointly and qualifying surviving spouse; and. $63,000 for head of household.
Current tax law does not allow you to take a capital gains tax break based on your age. In the past, the IRS granted people over the age of 55 a tax exemption for home sales, though this exclusion was eliminated in 1997 in favor of the expanded exemption for all homeowners.
An easy and impactful way to 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.
The majority of states levy capital gains taxes – the only ones that don't are Alaska, Florida, New Hampshire, Nevada, Texas, South Dakota, Wyoming, and Washington. You may face additional capital gains tax consequences in these other states if you sell an investment or asset for a profit prior to moving.
Here's how it works: Taxpayers can claim a full capital gains tax exemption for their principal place of residence (PPOR). They also can claim this exemption for up to six years if they move out of their PPOR and then rent it out. There are some qualifying conditions for leaving your principal place of residence.
Upon the sale, you will be required to pay the state between 0% and 14.4% of your profit. The states with the highest state capital gains tax are as follows: California (up to 14.4%) Minnesota (up to 9.85%)
Billionaires avoid these taxes by taking out special ultra-low-interest loans available only to them and using their assets as collateral. This income works just like any other kind of income, allowing ultrawealthy to purchase homes, yachts, or even, Twitter.
While there is no state in the U.S. that doesn't have property taxes on real estate, some have much lower property tax rates than others. Here's how property taxes are calculated. The effective property tax rate is used to determine the places with the lowest and highest property taxes in the nation.
Countries that do not impose a capital gains tax include Bahrain, Barbados, Belize, the Cayman Islands, the Isle of Man, Jamaica, New Zealand, Sri Lanka, Singapore, and others.
If you have a large number of assets there might be a benefit to reside in one of the following states. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
9 States That Don't Tax Any Income at All
Nine states have no state income tax on individual income at all. Eight of them – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – don't tax wages, salaries, dividends, interest or any sort of income.
A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.
While the federal long-term capital gains tax applies to all states, there are eight states that do not assess a long-term capital gains tax. They are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
Sale of your principal residence. We conform to the IRS rules and allow you to exclude, up to a certain amount, the gain you make on the sale of your home. You may take an exclusion if you owned and used the home for at least 2 out of 5 years. In addition, you may only have one home at a time.
The seller, or at least one title holder, had to be 55 or older on the day the home was sold to qualify. Following the passage of the Taxpayer Relief Act of 1997, the exemption was replaced. As of 1997, there are new per-sale exclusion amounts for all homeowners regardless of age.
This tax loophole allows property owners to defer capital gains on their sale as long as the proceeds are used to purchase another property within a set time frame.
To avoid paying capital gains taxes (and depreciation recapture), you can reinvest in a "like-kind" asset with a sales price of at least $500,000. The IRS allows virtually any commercial real estate property to qualify as 'like-kind” as long as you hold it for investment purposes.
If it's your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.
Taxes aren't determined by age, so you will never age out of paying taxes. People who are 65 or older at the end of 2024 have to file a return for tax year 2024 (which is due in 2025) if their gross income is $16,550 or higher. If you're married filing jointly and both 65 or older, that amount is $32,300.