Is it really possible to avoid paying taxes on the gain of an investment property?

Many of my clients have established a high performing investment program for themselves using rental properties as leverage to create equity.  Here’s how it goes.

Buy a home that you live in for two years. Then purchase another property to live in and rent the first property for up to 3 years. Under the Capital gains exemption offered by the tax code, the gains on the property for that period qualify as tax exempt up to $250,000 for each spouse, provided they both lived in the property for 2 out of the past 5 years.

Take the profits from the sale of that property and purchase another property that you then live in for 2 years. Consult your CPA for advice on how many times you can continue this process.

By: Marie Callaway, Realtor & CEO of Callaway Group Real Estate