12 Legal Ways to Reduce Your Tax Burden

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Adjust your basis for capital gains tax

Calling all investors out there! When you calculate the cost basis after selling one of your financial assets, just make sure to add in all of your reinvested dividends. If you do so, you’ll increase the cost basis, while reducing your capital gain when you sell the investment.

See also: 11 Tax Breaks That Benefit Homeowners and Home Buyers

Selling your house could also translate to capital gains, especially if the value of the property has risen significantly. Single taxpayers can actually exempt $250,000 of their home’s value from the capital gains tax, and married couples can get an exemption of $500,000.

P.S.: Uncle Sam allows you to claim this type of exemption once every two years. But there are also the costs of improvements and renovations. You can still deduct those from the capital gains.

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