Marriage has its many benefits: shared dreams, companionship, and even that person who remembers when tax season is coming. But perhaps one of the most unheralded advantages of marriage is how it can help you legally minimize your capital gains tax bill.
If you and your spouse are investing together in real estate, stocks, or other assets, the tax code actually gives you some powerful tools to lower what you owe. Let’s break down how couples can use depreciation, deductions, and deferral strategies to keep more of that profit in the family.
What Capital Gains Taxes Means for Couples
A capital gain occurs when you sell an investment, such as property, stocks, or crypto, for more than what you paid. The difference of the sale price and the purchase price is your gain, and the government taxes it.
But if you’re married filing jointly, you and your spouse are treated as one financial unit. That might sound scary, but it’s usually great news for your wallet. You get:
Higher income thresholds before hitting the higher capital gains tax brackets.
More flexibility in using exemptions, especially on your home sale.
LARGER DEDUCTIONS AND DEPRECIATION BENEFITS IF YOU OWN RENTAL PROPERTY.
Basically, the IRS gives couples a little more breathing room-if you know how to use it.
- Double Your Home Sale Exemption
One of the best-known and most generous tax breaks for married couples is the home sale exclusion.
Here’s how it works:
If you sell your primary residence, a single person is able to exclude up to $250,000 in profit from capital gains tax.
If you’re married and file jointly, that exclusion doubles to $500,000.
To qualify, both of you need to meet the ownership and use test — meaning at least one spouse owned the home, and both of you lived in it for two of the last five years before selling.
That’s half a million dollars in tax-free profit. Not bad for just sharing an address and a Netflix account.
- Depreciation Can Reduce Your Taxable Income
If you and your spouse own rental property or investment real estate, depreciation is one of your strongest tax tools.
Depreciation lets you deduct a portion of the property’s value each year to account for wear and tear. It’s not an actual expense-you’re not paying cash for it-but the IRS treats it like one, lowering your taxable income.
If you purchased a rental property worth $300,000 – for instance, excluding land value – you can typically depreciate it over 27.5 years; that works out to about $10,900 of deductions per year.
And if you co-own that property with your spouse and file jointly, all of that depreciation counts toward your combined income-meaning it can help reduce your overall tax bill.
Bonus tip:
When you sell the property, the IRS may require depreciation recapture-you’ll pay tax on the total depreciation you claimed. But even then, it often still reduces your overall taxable gain-especially if you reinvest wisely, which brings us to the next point.
- Defer Taxes with a 1031 Exchange
If you are selling an investment property, one of the smartest moves you and your spouse can make is a 1031 exchange.
A 1031 exchange allows the sale of a property and reinvestment of the proceeds into another “like-kind” property without the immediate payment of capital gains tax.
The basic rules:
The new property must be of equal or greater value.
You have 45 days to identify the replacement property.
You would have to close within 180 days of selling the first one.
You’ll need the services of a qualified intermediary, whereby the money is held between the two transactions.
For couples building a real estate portfolio, 1031 exchanges are a game-changer. You can keep rolling profits from one property to another, deferring taxes for years — or even decades.
And if you hold your properties long enough, your heirs could eventually receive them with a step-up in basis, wiping out the deferred taxes altogether.
That’s the power of playing the long game together.
- Maximize Deductions — Especially as a Team
When you’re married, deductions double-and that can make a big difference when it comes to capital gains.
Here are some smart deductions to look at:
Property expenses: Repairs, maintenance, mortgage interest, and property management fees can all reduce your taxable income.
Investment expenses: Brokerage fees, legal costs, and financial advisory fees related to your investments.
Loss offsets: If you have losing investments, you can use those losses to offset your capital gains. As a married couple, that $3,000 annual loss deduction applies to your combined return.
The more deductions you claim — accurately and legally, of course — the lower your effective tax rate, and the more money you keep compounding.
- Coordinate When You Sell
Timing is more important than most couples consider. Because your incomes are combined on a joint return, a major sale occurring in a high-income year could push you into a higher capital gains bracket.
Timing your sales, particularly large ones, strategically can keep you in a lower bracket.
Example:
If one spouse has a lower-income year-say, taking time off work or starting a business-that may be the ideal time to sell an appreciated asset.
Joint planning means you can play defense and offense at the same time-reduce taxes while hitting your financial goals.
- Strategic Use of Spousal Transfers
Another underrated advantage? You can transfer assets between spouses tax-free.
This can be useful in the event that one spouse falls within a lower income bracket. If you transfer the assets before sale, you might pay less in overall capital gains tax.
Of course, there are rules and exceptions, so this is one to handle with a tax professional — but it’s 100% legal, and often overlooked.
Final Thoughts on Capital Gains Taxes: Two Heads – One Tax Plan
When it comes to capital gains, marriage really can be a financial superpower — if you plan smartly. With doubled exemptions, shared deductions, and even the option of long-term deferrals, you and your spouse can turn what’s normally a tax headache into a wealth-building advantage.
Whether you are selling your first home, flipping properties, or growing a real estate empire together, the secret is simple: plan your taxes as a team. Because in marriage, as with investments, the couple that plans together profits together.
If you want to calculate your capital gains taxes for tax season, then go to our website: Capitaltaxgain.com.
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