Selling a home can have tax consequences. You may have to pay these types of taxes:
Capital gains tax: This is the tax on the profit you make from selling your home. The profit is the selling price minus the cost basis (the original price plus any improvements). You can avoid this tax if you sell your primary residence (the home where you live most of the time) and meet some conditions. You can reduce this tax if you sell a non-primary residence and use some strategies.
Property tax: This is the tax that you pay to your local government based on the value of your property. You pay this tax until the closing date when the buyer takes over. You may get a refund or a credit from the buyer if you paid property tax in advance for the time that you did not own the property.
Real estate transfer tax: This is the tax that you pay to your state or local government when you transfer ownership of your property. The amount of this tax depends on where you live and how much you sell your property for. This tax may be paid by you, the buyer, or both.
To save tax on selling your home, plan ahead and consult with a tax professional.
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