Real Estate Taxes
Taxes can either make you or break you in real estate. Making quick, uninformed decisions may mean you'll be getting a hefty tax payment after all the dust settles. But there are many tax breaks out there that you can take advantage of.
Homestead exemption is one of the most common tax deductions out there that people use. In Baton Rouge we're able to not have to pay taxes on property valued at $75,000 or below. If your property is above $75,000 then you'll be required to pay taxes on the remaining amount that exceeds the $75,000 mark. This can end up saving you about $750 a year. In order to apply for homestead exemption, the house must be your primary residence, meaning that you live there. So, you only get this break on one property. You may apply downtown at the Assessor's office by filling out a form. It is very easy to do.
If you want a break on taxes for investment properties then you'll want to consider a 1031 Exchange. More is said on 1031 Exchanges.
Capital Gains Exclusion Rule: And if you live in a house for 2 of the last 5 years you're eligible to not have to pay taxes on the gain on the house for up to $250,000. If you're married then that you're covered for up to $500,000.
For more details and to verify the information you'll want to talk to your CPA about it.
Long term capital gains and short term capital gains are two taxes that you'll also want to talk to a CPA about. By selling a property you've owned for less than one year you may be subject to a 35% short term tax on your gain, as opposed to a long term capital gains rate of 15%.
