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If you’re considering selling your luxury home in Florida, you could be in for a nice payday! Before you start making plans for the money, it’s crucial to understand your property tax obligations. This post will cover what you need to know about property taxes when you sell a luxury home in Florida.
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The median sale price of a home in Sarasota for April 2023 was approximately $495K at the time of this writing. Real estate data changes daily. If you need to buy or sell a home in the Sarasota Area, please click here to contact us.
3 Things To Know About Property Tax Obligations Before Selling A Luxury Home In Florida
1. Understanding Property Tax
As you probably know, property tax is a tax you pay on real estate you own. Florida bases property taxes on the value of the asset. That means your tax bill goes up as the property value increases. Remember, the tax rate varies depending on where you live but typically ranges from 1-2% of the appraised value.
However, several exemptions and deductions are available to homeowners to help reduce their property tax bill. For example, a homestead exemption may apply if the property is your primary residence.
As it concerns selling a home, the seller must pay their outstanding tax bill at closing. Let’s say you close at the beginning of April. That means you must pay taxes for January through March.
2. Sellers Must Pay The Florida Documentary Stamp Tax
If you’re a seller in Florida, you must be familiar with Florida Documentary Stamp Tax. This tax is for documents that transfer an interest in Florida real property. The seller is typically the party to pay this tax.
The tax rate is $.70 per $100 of the consideration paid for the transfer. For example, if you sell your house for $300,000, you must pay a tax of $2,100. It may seem small, but it can add up quickly, especially when selling high-value properties. If you’re a seller in Florida, make sure to account for this tax.
3. Capital Gains Taxes
Beyond property taxes, home sellers might need to pay federal capital gains tax on the sale. However, this depends on a few factors. There is an exemption for selling properties that are the owner’s primary residence. At the time of writing, the exemption is on the first $250,000 profit for single people. For married couples, it is the first $500,000 of profit.
Whether you’re a first-time seller or a seasoned real estate professional, you need to understand your tax obligations. It can help you achieve a more financially beneficial sale. Tax knowledge can also help you avoid issues with the authorities.
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