You may think that since you’re selling your house, you’re not obligated to pay any tax; the truth is there are different types of taxes to pay, which affect the sale of your home.
You may be lucky not to pay taxes when selling your house, depending on your situation. In your situation, you may have to pay taxes or not, so you must research the taxes you may eventually pay. The most common problem where people have to pay taxes is if they have inherited the property and used it to generate income through renting.
What Taxes Are There?
When selling your property, you may have to pay a few taxes; we have listed these taxes below:
- Capital Gains Tax (CGT)
- Inheritance Tax
- Income Tax
- Stamp Duty
Is there a way whereby you don’t have to pay these taxes? Yes, there is.
You can avoid paying Capital Gains Tax if:
- You have one property where you lived mainly the whole time.
- The grounds are less than 5,000 square meters
- You didn’t purchase the property to make profits
- You have not rented out any part of it
- You haven’t used the property for any business
- If you were gifted the property from a husband, wife, or charity.
Avoiding Inheritance Tax
It can be a bit challenging to avoid inheritance tax on the sale of your home. If the property was left to you and the tax is due, you have no choice but to pay it. However, if you’re going to leave an inheritance for your loved ones, you can always pre-plan for an inheritance situation so that they can avoid the tax. You can do this by:
- Giving gifts
- Leaving money to charity
- Leaving the estate to your spouse
- Using property allowances
- Deed of variation
Avoid Income Tax
If you’re renting out a property, this is considered earnings under income tax, and you’ll be required to pay on your house sale. So there’s no avoiding income tax.
Must you pay taxes on money from selling your house?
If the property for sale is your main residence, you will automatically be free from paying tax. You’re only expected to pay tax if you rent out your home, use part of your home for a business, or have a second home. However, if you don’t fall under this category, then you can be exempted from paying taxes on money from selling your house.
Do I Need To Get Professional Advice?
The subject of paying tax on the sale of your house can be confusing. And if you’re confused about what you owe or can reduce or avoid the tax rate, you can always seek the advice of a law professional.
What We Can Offer
At Home Cash Guys, we buy houses Philadelphia in any condition, in any location. If you want to sell your house fast in Philadelphia, or you want to learn more about our services, then contact us today. We inspect your home before we make our price offer.
If the tax for your home is high, we can quicken the buying process so you can sort out the required fees. We can buy your house within seven days and make the process seamless.