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| *Ostroff, Fair and Company>>>Other Taxes |
Do i have to pay capital gains tax when i have already paid real property tax? Why? |
Do i have to pay capital gains tax when i have already paid real property tax? Why? The simple answer to your question is - YES. The reason is simply because you are talking about 2 different taxes. Real property tax is a tax that is assessed to all those who own property. It is essentially an ownership lien, very much like the taxes you pay on your automobile, boat, etc. Capital gains tax is an INCOME tax that is triggered when a taxable transaction takes place. In this case, the transaction is the act of you selling your property. The tax you pay is the difference between your sales price and your basis in the property. (varying rules for principal residences/real estate rentals/or exchanged properties) Yes, Because the gov't wants your money. Yes, property taxes are an annual tax based on the cities assessment value. So if you paid 150k for your house and sell it for 175k you owe cap. gains on 25k. However, if you use that 25k to purchase a property of equal or greater value you can defer the tax on those gains. Property taxes are paid for owning the property., and capital gains are paid on selling the owned property., they are different taxes for different acts and both are paid to different Govts (Municipal and central govt.) |
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