Investment Property Taxes Capital Gains – What Investors In South Florida Need To Know

Investment Property Taxes Capital GainsWhat Investors In South Florida Need To Know about Investment Property Taxes Capital Gains

Real estate investors looking to sell a property or thinking of buying one and selling it in the long run are both worried about the taxes they’ll incur alike. This blog post will help you learn about investment property taxes capital gains and what are the important things that you should know about it.

Before you begin, let us be clear that this is generalized information and may vary for people/investors outside or inside Florida. This is just an overview intended to guide you. If you need proper information please talk to an accountant or a tax attorney before you take any decision.

Types Of Taxes For Different Types Of Income

Taxes vary with the types of income. For example, straight income coming in from a job could be taxed as a regular income at a regular tax rate. However other types of income might be taxed at different rates. Let’s take a stock market investor as an example; his income derived from the dividends will have their own different tax rates. Similarly for real estate investors, the income they make from capital gains by sale of a property have their own different tax rates.

Investment Property Taxes Capital Gains

Let’s get started from the beginning: when you buy property, you pay for it, when you sell, you will get what the buyer will pay you. The difference between this price (what you brought the property for and what you sold it for) is your capital gain. For example you bought the property for $200,000 and then sell it for $225,000. Your capital gain is $25,000 and this will be your income that will be taxed at the capital gain rate.

Why Do Capital Gains Have Different Rates?

Taxes for capital gains usually have a lesser rate than the regular income. There are a few reasons for why capital gains are taxed differently: one of them being the reason that the gain might be substantial for one sale allowing you to keep extra money after paying up a normal tax rate. The other reason can be the fact that government wants to encourage the buying and selling of assets (its good for the economy) and therefore they provide an incentive as a lower tax rate.

Capital Gains On Investment Property In Comparison To Your Primary Residence

Remember that the capital gains on your house (one you live in) are treated differently than the property you own. Some important factors for these are: whether you’re living in the particular house, your duration of living, whether it is secondary property (like cottages etc) or investment/rental property. It’s best if you talk to an attorney because situations are different for everyone.

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