Virginia Real Estate Exam Practice Question
Your client, Bruno, is an investor. He is in the process of selling a fourplex and mentions to you that he hates the idea of the capital gains tax hell be subject to. What should you tell him?
Correct Answer: D
Rationale: Option D suggests a 1031 tax-deferred exchange, which allows investors like Bruno to defer capital gains taxes by reinvesting the proceeds from the sale into a similar property. This strategy is beneficial for managing tax liabilities while continuing to grow his investment portfolio.
Option A is incorrect; capital gains taxes do apply to investment properties, including fourplexes.
Option B is misleading; while some tax strategies can minimize liabilities, investors are still subject to taxes on profits.
Option C, while true in a general sense, does not provide constructive advice specific to Bruno's situation regarding capital gains tax.
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