Taxes And Homeowners
What are "property taxes", and how do I pay them?
When you're looking at the Schedule A and Itemized Deductions, one of the sections is relating to taxes. In amongst that section, there is a line dealing with real estate taxes, property taxes on your home. If you own a home, the county of residence will bill you for some property taxes. You pay those typically twice a year, or the bank pays them through an impound account for you. Those taxes are deductible on your tax return as an itemized deduction on that Schedule A.
If I sell my home, am I responsible for property taxes?
You are responsible to pay the property taxes for the period of time that you owned the home. If you owned a home from January 1st and you sold it on May 30th, you're responsible for the property taxes from January to May 30th. The person who bought the house from you is responsible from June 1st through the rest of the year. If there's some kind of proration or apportionment to be done, that's usually done by the escrow company or the attorney handling the sale.
If I receive property as a gift, do I have to pay taxes on it?
Bear in mind that while the receipt of property such as a house as a gift from your parents, grandparents or whatever, there's no income tax to pay on that gift income or on that house when you receive it, but there are a lot of ramifications on the value of the house in your hands. If you sell the house, will you have tax to pay on the sale? There's a lot of other things that could come into play than just receiving the gift, while it's welcome, it may have tax problems that you need to know about. I urge you to go and seek the help of a financial advisor or an accountant, to explain the ramifications of receiving this house as a gift, and what the future may hold for you.
If I sell my home, do I have to pay taxes on the profit?
You're selling your house and you're moving on,whatever the reason may be, and you've made a profit on the sale of your house. If you're a single person and you sell the house, you've lived in it for at least two years, and you made $250,000 or less, you don't have to pay any tax on that $250,000 profit from the sale of the house. That's for a single person. If you're a married person, then you're two single people living together. You could make a half a million dollar profit on the house and not pay any tax on that half a million dollar profit.
If I sell my home for less than I bought it for, can I take a credit?
Let's imagine that you sell your house for less than you bought it for. You paid $200,000 for the house, and when you sold it you only got $190,000. You therefore had a $10,000 loss. Unfortunately, it's your principal residence and you don't get to deduct that loss on your tax return.
