Taxes when selling a rental to buy a primary residence

Best Property Management Florida

As a property owner, you might be aware of the fact that Floridians do not have to pay state income tax charges like that of other US states.

But did you know that Floridians are taxed on the profit incurred by renting or selling out their property?

A piece of advice: It would be helpful to consult Florida property management experts to learn the implications of all the property taxes beforehand.

With that said, this blog will introduce you to all the taxable charges for renting a property in Florida so that you can buy a primary residence.

Three common property taxes in Florida

Return on investment is definitely one of the biggest factors to look out for while renting your property.

So, get acquainted with the tax forms of your state can help you out with putting up houses for rent in Orlando or all over Florida.

Check out the three common property taxes implemented by the state of Florida:

Property Tax

The Florida property management experts are consulted to assess the estimated value of every property from all the counties.

This is how the general property tax is evaluated based on the assets. The Floridians are liable to pay the property tax annually to the state.

The churches, government entities, and schools are exempted from paying the property tax in Florida.

Capital Gains Tax

According to the federal guidelines imposed by the Foreign Investment in Real Property tax act, Floridians are subjected to pay a certain estimated amount on the profit gained by selling one's property.

You can consult Florida property management experts for the appraisal of your property. It also helps you calculate the exact value of all the assets.

Rental property tax

The property managers involved in the management of houses for rent in Orlando or all over Florida are liable to pay a certain estimated amount in the form of Rental property tax.

This is the tax levied on rental properties that incur a subjectable amount of profit from the tenants.

While you cannot escape the capital gains tax for owning rental properties, you can certainly enjoy other perks and benefits.

Selling a rental property? Tax consequences to consider

Did you know?

As per the Florida property management experts, in the past 5 years, home values have soared up to more than 60% in the US.

We owe this to the extremely high demand for housing and rental properties which has currently made the supply chain slower.

But, what are the implications of taxes by selling rental properties let us discuss:

The tax rates for long-term capital gains can be valued at 0%, 15%, or 20%
Also, apart from the capital gains tax, the depreciation recapture tax in also imposed on rental properties for a whopping 25%
If you are filing for a joint tax account, especially as a couple, you will be liable to pay 15% of the profit as tax.

Those were some of the major implications of managing houses for rent in Orlando or all over Florida in general.

From our point of view, keeping in mind the extravagant tax rates, it is best to sell your rental property in order to buy a primary residence.

The Florida state laws have announced the provision of several tax assistance and exemptions for property owners which make the whole process a lot easier.

With that said, check out some of the methods you can apply to escape the tax hits on rental properties.

How to escape taxes on rental properties?

The methods discussed as follows are some of the lesser-known facts that you might not have been noticing until now.

Tax-loss harvesting

Have you lately incurred huge amounts of loss in your professional field? If you own a rental property at the same time, you are eligible to make use of this method.

By applying for offset gains with losses you can cover a certain amount of those losses by paying relatively lesser tax rates.

Keep in mind that you will be subjected to prove that the loss incurred in your professional field was not strategic or planned.

Section 1031

According to Florida property management experts you can escape paying rental taxes on a certain property by selling and purchasing another property of a similar kind.

This initiates an exchange process between the legal documentation of the two properties and you can invest in real estate after the completion of this procedure.

The list of similarities between the two properties is something that should be thoroughly considered before taking the step.

But this is one of the most efficient ways of escaping the capital gains tax.

Winding Up

Houses for rent in Orlando or Florida, in general, are some of the greatest sources of tax accumulation by the state.

That is why investing in primary residence by selling your rental property can be the best course of action if you are a legal resident of Florida.

Best Property Management Florida

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