If you’re a real estate investor looking to sell your property, or if you are thinking of buying one now and want to be able to plan for the future when it comes time for sale, there is something important that we will touch on: capital gains. In this blog post, I’ll explore what Orlando investors need in terms of understanding investment property taxes capital gains.
I know that you might be reading this and think, “What’s the big deal? I’m outside of Orlando.” That’s a great question. There are plenty of factors to consider when it comes to your individual taxes – like whether or not you have employees in other states or if any members on your team work remotely. Don’t worry though; we’ll answer all those questions for you!
Know The Different Types of Income and Corresponding Tax Laws
It can be confusing to navigate the different types of taxes that may apply depending on your income type. For example, some people might pay regular taxes when they earn a salary or wages but have other forms of incomes taxed at different rates like dividends from stocks.
What Are Investment Property Taxes Capital Gains?
Whether you’re buying or selling a property, that capital gain is the difference between what it was worth when you bought and sold. Suppose that you bought a property for $500,000 with the hope of reselling it at some point in time. If you were able to sell this same property for $550,000 then your capital gain would be $50,000 – this is the amount of money you will be taxed on.
Whether your focus is on investing in real estate to earn passive income while making money elsewhere, flipping houses for profit, or just seeing how much wealth can accrue with an investment over time–knowing where opportunities lie will help make every dollar count!
Why Is There a Different Tax Rate for Capital Gains?
Capital gains tax rates are usually less than the rate you pay for your regular income. There are a couple of reasons why capital gains is taxed differently: one, if the gain can be quite substantial on real estate so an average tax rate could quickly become prohibitive to deal with; two, because government wanted to encourage buying and selling assets (which is good for the economy) they offered incentive in form of lower-than-average taxable percentage.
Investment Property Taxes Capital Gains vs. Primary Residence
You should be aware that capital gains on your residence (the house you live in) may differ from other property. Some important factors include: whether you live in the house and for how long. Or, whether it’s a secondary home such as a cottage or an investment like rental properties. You need to talk with tax attorneys about this because every situation will vary greatly depending on each individual’s circumstances.
When you’re ready to start investing in real estate, be sure your tax situation is optimized. That’s why we’ve partnered with a great local attorney who can help! Just enter some information on this page or call us any time and get the ball rolling now.