Rental property sold for profit in 2022 - Capital gains exemption

I sold a rental property this year for a profit of over $50,000. To avoid penalty from the IRS, I thought I could set up a 2-member LLC and use the profit through this in the form of donations, purchase and sales,etc. Will that work as one way to avoid penalties?

Also, what is a one-time capital gains income tax exemption? Would this help me?

Thank you.

120

Level 15

Aug 31, 2022 3:59:53 PM

The capital gains exemption does not apply to rental property. I don’t know what “penalty” you are referring to. You will pay capital gains tax on your profit. What you do with the proceeds of sale doesn’t affect your tax liability for the sale.

Why sign in to the Community?

Rental property sold for profit in 2022 - Capital gains exemption

I sold a rental property this year for a profit of over $50,000. To avoid penalty from the IRS, I thought I could set up a 2-member LLC and use the profit through this in the form of donations, purchase and sales,etc. Will that work as one way to avoid penalties?

Also, what is a one-time capital gains income tax exemption? Would this help me?

Thank you.