Selling a second home anywhere comes with certain questions and prices attached to it. Taxes on Selling a Second Home. You have to wonder how quickly the property will be sold and if the price that is listed is the right one or not. However, in addition to the questions that might be lurking in your mind, there are also certain taxes that are imposed on selling your home. Understanding the implication of these taxes are important if you are selling a second home in Florida.
Taxes on Selling a Second Home
Florida Real Estate: Three Types of Taxes
In order to understand the implications, taxes on selling a second home, you must recognize that there are 3 types of taxes on property which is located in Florida.
- Florida Property Tax: All properties situated in Florida are assessed by a taxable value and owners have to pay this on annual basis except charitable entities, churches, schools and governmental properties.
- Capital Gains Tax: In simple terms, this type of tax is levied on the profit that is made on the increase of the property’s value since you purchased it.
- Federal Tax on Rental Properties: This type of tax is applied only on the rental income that is generated from renting out a property such as a vacation home or any other investment property.
The first two types of taxes are important for home owners wishing to know about the taxes on selling a second home in Florida and will be discussed below.
Florida Property Tax
Every property in Florida is annually (i.e. January of each year) assessed by a local county appraiser. The assessment is based upon the prevalent relevant market prices. They are the same for every property regardless of the fact who is owning the property.
Some property owners such as widows/widowers/ and disabled veterans may be entitled to receive a credit against the taxes that are owed.
You may wish to visit the Florida Department of Revenue website for more information on this and how each particular county in Florida assesses its property values. The values are generally released for the public around late summer every year.
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Capital Gains Tax
Taxes on selling a second home. This type of tax is applicable on both citizens and non-citizens. This is one of the primary means by which the US Government generates its revenue.
It is levied on the profit that is accrued on the sale of the property and is generally calculated by subtracting the actual sale price from the purchase price of the property minus the miscellaneous expenses. However, keep in mind that there is a Federal Rate of 20 percent that is applicable in addition to the Capital Gains Tax that is calculated. For more detailed information, it would be advisable that you contact an accountant.
You could also reduce the overall amount that you have to pay in such taxes if you can show that you have lived in your second home for about two years hence treating it as your primary residence.
It is always advisable to talk to an accountant or a tax consultant both whom can guide you about the ways in which you can save the maximum amount of money that you owe as taxes in selling a second home in Florida.