How do I avoid capital gains taxes when selling stocks, like investing the money in real estate?

Becoming a home owner teaches you to quickly learn the meaning of words like capital gains tax. It’s important to always know how this dollar amount can hurt you and you can manage around it.

Let’s say you purchased stock ten years ago. Those stocks have grown in value over the years and now you’ve decided to sell them. The profit that you built in those stocks is your capital gain and that amount will be taxed.

Unfortunately, avoiding the tax altogether is nearly impossible. You’re bound to pay taxes on the portion of this profit. But, if you want to take a chunk away, transfer some of the stock to your children. Parents are eligible to give up to $11,000 in stock to their children as a “gift” without paying the capital gains tax. Plus, if you’re married, your spouse can do the same essentially doubling up on the exemption. If you move more than $11,000 to a child’s account, then you’re liable to pay a gift tax, so be careful of dollar amounts when shifting stock.

Although getting out of taxes isn’t as easy as we’d like it to be, a small exemption is possibly. Check with your accountant before making any transfers. In 2008 many changes are anticipated to the laws that govern capital gains taxes, this would actually seek to make taxation almost mandatory despite the cash is spent to another asset acquisition. This will undoubtedly pose a problem in the long run.