If you’re a real estate investor looking at selling a house fast in Omaha and Council Bluffs, or if you’re thinking of buying a property now and thinking long-term about selling it, then you might be worried about what taxes you’ll incur. In this blog post, you’ll read about investment property taxes and capital gains and what home buyers in Omaha and Council Bluffs should know about capital gains.
Before you read further, you should be aware that this information is provided in general to a wide range of readers each person reading in a different area inside or outside of Omaha and Council Bluffs, perhaps with different corporate structures and many other factors. So we’re providing a helpful overview but you should always talk to an accountant and tax attorney before making any final decisions for yourself.
Different Types Of Tax For Different Types Of Income
There are different types of tax for different types of income. For example, straight income that comes in from a job might be taxed as regular income at your regular tax rate. But other types of income may be taxed at a different tax rate. For a stock market investor, for example, income derived from dividends have its own tax rate. And for real estate investors like direct cash home buyers in Omaha and Council Bluffs, you should be aware that income derived from capital gains on the sale of a property has its own tax rate.
What Are Investment Property Taxes Capital Gains?
Let’s start back at the basics When you buy a property, you pay a price when you sell a house fast in Council Bluffs and Omaha, you get what the next homebuyer pays you. The difference between the price you bought the property for and what you sold the property for is the capital gain. Let’s say you bought the property for $100,000 and you sold it for $125,000. The capital gain is $25,000 and this is the income that is taxed at the capital gain rate.
Why Do Capital Gains Have A Different Rate?
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 are taxed differently one of the reasons is because the gain can be quite substantial on a piece of real estate so a normal tax rate can be quite prohibitive to pay, so a capital gains tax rate is like keeping extra money in your pocket. The other reason is that the government wanted to encourage the buying and selling of assets (which is good for the economy) so they provided an incentive (a lower rate) to do so.
Capital Gains On Investment Property Versus Your Primary Residence
You should be aware that capital gains on your residence (the house you live in) may be treated differently than other property you own. Some important factors include whether you live in the house and for how long, or whether it’s a secondary property (such as a cottage) or an investment property such as a rental property. You should talk to a tax attorney about this because the situation will be different for everyone.
If you want to know more about real estate investment properties, or if you want to get introduced to a good tax attorney who can help you optimize your tax situation. We buy houses in Omaha and Council Bluffs which means we are pros when it comes to real estate inventory and markets in the area. Just call a professional direct cash home buyer in Council Bluffs and Omaha from Harter Investments at 402-939-6556 or send us a message today or visit us at www.harterinvestments.com!