United States - Property Taxes

Property Tax

Taxes levied on real estate properties by local government based on the assessed value of the property.
The tax rate varies by location, but the national average rate is around 1.1%.
Example: A property with a market value of $500,000 and a property tax rate of 1.1% would result in a $5,500 property tax bill.

Capital Gains Tax (CGT)

Taxes owed on the profit made from selling a property that is not your primary residence.
The tax rate is 20% for most taxpayers, with a portion being excluded for individuals.
Example: If a person sells a property for $600,000, and the cost of buying and selling the property was $100,000, the individual would owe CGT on $500,000 ($600,000 – $100,000), resulting in a $100,000 tax bill.

Tax on property that is passed down to heirs upon the death of the owner.
There is no federal inheritance tax in the United States, but a handful of states have their own inheritance tax laws.
Example: If an individual inherits a property worth $500,000 in a state with an inheritance tax rate of 10%, they would owe $50,000 in inheritance tax.

Tax on gifts of property or cash given to individuals.
The tax is owed by the giver, not the recipient, and the rate is the same as the federal income tax rate for the giver.
Example: If an individual gives a property worth $500,000 to their child, they may owe a gift tax of around 40% if their federal income tax rate is that high, resulting in a $200,000 gift tax bill.

Tax owed on rental income from a property.
The tax rate is the same as the federal income tax rate for the owner.
Example: If an individual earns $15,000 in rental income from a property, they would owe federal income tax on that amount at their marginal tax rate, resulting in a tax bill that would vary based on their specific tax situation.

Tax Advantages in Buying a House in the United States

Mortgage Interest Deduction: Homeowners can deduct the interest paid on their mortgage from their taxable income, up to a limit set by the government.
Property Tax Deduction: Property taxes paid on a home are deductible on federal income taxes.
Capital Gains Exclusion: If you sell your primary residence, you can exclude up to $250,000 in capital gains from taxes ($500,000 for married couples filing jointly).
Home Office Deduction: If a portion of your home is used exclusively for business purposes, you may be able to deduct expenses related to that space, such as mortgage interest, property taxes, and utilities.