What Are Real Estate TaxesBetween property, real estate, sales, and capital gains taxes, you’re likely to run in to at least one of them if you’re in the market to buy or sell a home.

Property Taxes

People ask “What’s my home worth” when it’s tax time because property taxes are based on value. Fair market value is the key and the more the home is worth, the more property taxes you have to pay.  The median property tax in Florida is $1,773.00 per year for a home worth the median value of $182,400.00. That is slightly below the median tax in the United States but it’s not insignificant. It’s also something you can’t avoid by ignoring it.

The taxman shall be paid so make sure you take care of it. If you have a mortgage, it’s possible the lender is collecting taxes (and insurance) in escrow to pay the bills when they come but if you have recently paid off your mortgage you better check and make sure those are paid.

It’s sometimes helpful to appeal your tax bill if you think the value is off. The appeal process depends on where you live so do a little research on that. A good real estate agent can help you figure out a fair market value and you should reach out to them to get good numbers.

Real estate transfer tax

This is a tax charged at the time of closing. Some call it a documentary stamp fee and it involves the recording of the sale in the official documents of the county the sale occurred. Currently, the cost to transfer property is $0.70 per $100 in value. This can be paid by any party in most transactions and is negotiated at the time the contract is written. Make sure you know who’s paying.

Sales Tax

Normally, sales tax is not charged on real estate transactions (on what is called ‘real property’) but there is one place you might have to pay. Manufactured homes for sale in Kissimmee and mobile homes are not considered real property and a sales tax would be due. In Florida, the sales tax rate is 6% and it would be charged on new purchases of manufactured or mobile homes.

It gets a bit tricky with the ability to convert the personal property like a mobile home to real property and it involves owning the land and retiring titles so get some expert advice to make sure you’re not paying more than you owe.

Used mobile homes would be exempt from sales tax but are typically subject to a tax for transfer of title, generally, you can expect to pay $75.25 for vehicles or mobile homes.

No matter where you decide to live, there is likely a tax associated with it.

Capital Gains Tax

This one can be tricky too. If the property is your personal home and you’ve lived in it for at least 2 of the last 5 years, much of the capital gain tax can be exempt. If the property you’re selling is an investment, second home or otherwise does not fit the exemptions, the tax varies from 0% to 20% based on your income tax bracket if you’ve held it more than 1 year.

2018 saw some big changes in this area and you really need to consult a tax expert, CPA or other professionals to see how it affects you but knowing it exists is the first step.

If you are flipping properties and holding them less than 1 year, then the tax situation can get a lot more complex. Capital gains can be higher, you might owe state taxes, income taxes if you operated as a business and the list goes on. Do the research and make sure you are doing it right.

You need a team

If you’re flipping or rehabbing properties make sure you have the right team of experts on your side. You need a real estate agent, CPA or accountant and an attorney at the very least.

Bottom line

That’s what we’re all interested in, right? The bottom line. You can see there are taxes charged on just about every part of a real estate deal. This is complicated and if you’re not an expert then you best get connected to one.

Don’t navigate this process alone! The experts at Florida Realty Marketplace have plenty of experience helping find the right professional to help you keep the taxman from coming to your door. Contact us today to speak to a real estate professional.

Posted by Florida Realty Marketplace on
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