How to avoid real estate taxes
Things You'll Need
Real estate attorney or real estate attorney software
Gift the profit to your children. The IRS allows gifts to family members as a non-taxable amount. If the sale of your home is below the IRS taxable limit, you can avoid taxes by gifting the profit into an account for one of your children or disburse the amount among several children to meet the limitations.
Assume real estate losses in the same year that you gain. If selling your primary residence for a profit, move in to a bigger more expensive property or purchase investment property at the same time. Doing so will show a loss on your real estate transactions, helping you to avoid real estate taxes.
Use the property as your primary residence for 24 months prior to the date of sale. Doing this on investment properties can reduce your capital gains
tax on real estate transactions very substantially when owning investment properties. Live in the property for 2 years prior to the date of sale, and see your capital gains tax dwindle to next to nothing.
Put your real estate holdings in a trust. A real estate attorney can place all of your real estate and collateral as part of a non-taxable trust that can be conveyed to your heirs upon death. This allows you to make a profit on real estate, buy and sell real estate and do so with little to no tax consequences.
Participate in a property exchange. Individuals trading properties via deed of trust or deed of sale transactions can avoid real estate taxes completely. Both properties have to be clear of any liens or notes to complete this successfully, however, it is a great way to accumulate parcels of real estate with no tax consequence.Source: ehow.com