Are you aware that you must pay taxes on the profit from the sale of your home or investment property? Toll taxes can take a large chunk out of profits, which is not something you would like to surprise yourself with after making such a large investment. When capital assets, such as real estate, experience growth and are subsequently sold, a tax is levied on the capital gain. Capital gains are realized by the investor when the acquisition is sold.
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These gains are taxed differently by the IRS depending on whether the investor held the assets long or short-term. Your cost basis or original purchase price can be deducted by investors to determine capital gains. Cost basis and improvement costs can be deducted from the capital gain profit.
A plan for your investment, from acquisition to resale, should be in place before you even make your first investment. As part of this overall business plan, capital gains taxes should be avoided when the time comes to sell a property. The following will discuss what Savannah home sellers need to know about capital gains taxes.
Limits
These taxes are capped at a specific limit to restrict the growth of government revenue. Sellers of Savannah homes need to be aware of how these capital gains tax rate limitations may affect their investment. If your taxable income is at least $80,000 but less than $441,450 for single filers, $496,600 for married couples filing jointly, $469,050 for head of household filers, and $248,3000 for married couples filing separately, a capital gain rate of 15% will be applied. With rare exclusions, any gain exceeding the top limit of the 15% rate will be subject to a rate of 20%. A Net Investment Income Tax may apply to those with high incomes (NIIT). Your ability to deduct excess losses is also capped if your capital gains are negative due to capital losses.
Single vs. Married
An exemption from capital gains taxes of up to $500,000 over cost basis is frequently available every two years for Savannah property sellers who are married couples filing jointly or solo investors. Above the cost base, $250,000 is excluded. One of the criteria for this exclusion is that the property must have been used as your primary residence for at least two of the previous five years, albeit those years do not have to be consecutive.
It’s possible that you’ll have to pay approximated payments on your capital gains. To make sure you are choosing the best course of action for your investments, it is advisable to speak with a tax professional. A 1031 exchange of comparable properties allows for the deferral of capital gains. There are methods you can use to use capital losses to offset these taxes. Because you want to keep as much of your money as you can, it’s critical to have assembled a solid team of pros to serve as your guides in order to make sure you have covered all of your bases.
Sell your Savannah house to 32Homes LLC or choose a “like-kind” investment from our selection of top-notch investment properties to avoid capital gains taxes, as 32Homes LLC is well-versed in what Savannah home sellers need to know about capital gains taxes and how to do it! At 32Homes LLC, we make it simple for you to maintain the hard-won investment gains that have been producing wealth and ongoing passive income for you. Call 32Homes LLC at (912) 421-9907 or send us a message today!