MORE REAL ESTATE WORDS: TWO

Tax-Deferred

When people talk about 1031 Real Estate Exchanges, they use the word Tax-Free. The correct word is Tax-Deferred. You will be paying the tax sometime later. And in every exchange one party is normally going to be taxed, unless they are also doing an exchange. You can have several legs to an exchange, but it really gets tricky.

When someone uses the $250,000 – $500,000 Home Sale Profit Exclusion, that is tax free. Then, there is a tax credit and that is the best of all. It is a reduction of the tax you were going to pay.

So many things to learn, so little time.