You can avoid paying income taxes on the gain of a fixer-upper house. This strategy involves taking advantage of the tax-free gain on the sale of a home. For people who love to work on houses, this can be a great way to make money and pay no taxes.
This strategy requires that you live in the house for 2 of the last 5 years. The tax-free gain is up to $500,000 for couples and $250,000 for singles. The tax-free gain is a lifetime gain. As an example, if you are married, you could sell 5 houses with gains of