- A profit from the sale of property or an investment.‘a tax is imposed when individuals part with an asset and make capital gains on it’
When you sell your real estate investment you have a capital gain, provided there is in fact a “gain” or profit.
Short term and long term gains are taxed differently with long term being taxed at a lower rate.
One of the main reasons that real estate investing is tax advantaged is that capital gains tax can be deferred into the future or even indefinitely. This strategy involves using a 1031 exchange.