Think before buying. If you have not bought the investment property, it pays to think through the ownership, income and tax implications. You should evaluate income from rental, investment timeframe, market conditions and other tax situations before choosing ownership.
Step2
Evaluate ownership. Tax law allows for tax free capital gain on your primary residence. If you can either make it your primary residence or can make a co-owner (such as college going kid) live in the house for 2 years in the preceding 5 years, you can substantially save on tax.
Step3
Keep tab on improvement costs. They are deductible from the profit for tax purposes. Ensure that you have adequate records for your deductions. Tip: if you are making improvements yourself, like most American property owners do, keep in mind that you can’t deduct your labor. However you can deduct material costs.
Step4
Plan your sale. It helps if you can afford to plan your sale based on your tax situation. Often taking a substantial capital gain from sale of investment property, can put you at a disadvantage when combined with regular incomes. You might get caught in alternative minimum taxes which can be very unfortunate. It is best if you can chunk your incomes over multiple years.
Step5
Sales adjustments. If you are incurring out of pocket expenses towards the closing of your sale (such as renovating kitchen), see whether your buyer can take a cash credit instead. This simplifies your tax liability.
Tips & Warnings
while you can save on commission by selling the property yourself, it helps to have a real estate professional on your side to ensure that you are getting the right price and that the property sells promptly.
Enthusiast 
