Real estate investors are buying and selling properties all the time, and one of the most disruptive dents in your ROI is the payment of taxes. No one like to pay them, but if you earn capital gains while selling a real estate investment, you’ll be responsible for that tax liability.
You can’t avoid the taxes but you can defer them, especially if you’re willing to do 1031 exchanges.
A 1031 exchange allows you to sell one piece of income producing property for another property or properties that are similar. You can then re-invest the earnings from the sale and defer what you owe in taxes.
This is an outstanding opportunity. Not only does it save you on the tax bill, it also allows you to continue acquiring new investment properties. You can build your portfolio, for example, by selling one rental home and then using that money to buy two or three properties.