Avoiding or lowering the amount of capital gains tax that you may owe can provide a significant increase the amount of profits received from investments. The most important thing to remember is that capital gains tax is not due until the property or investment is sold.

Capital gains are taxed somewhat differently depending on whether the investment is a long term or a short term. Depending on the type of investment, there are many ways to avoid paying all of the capital gains tax that may be due.

• You may gift your stocks and bonds to your adult children. You can transfer up to $11,000.00 per year for each child.

• You may purchase real estate property that is more valuable than any real estate you sold during the same tax year.

• Provide personal financing when selling property. This will help reduce the amount of capital gains tax due by allowing the purchaser to pay you in installments.

• You can also execute a 1031 exchange. This is more or less a property swap. Since there is no income that was increased you are able to put off capital gains tax until the property provides you some type of income.

• Giving away property or investments to charity.

All of these options will require some pre-planning of your investments as well as using a good tax preparation software. TurboTax Online offers free online tax advice to help you get the biggest return possible. So go ahead and give them a try today!