Understanding the Basics of Real Estate Taxes

[Bette Hochberger]

Hello everyone!

As a CPA specializing in real estate taxes, I often get asked about the basics. So, let's start with an overview:

1. Property Taxes: These are local taxes levied by the county or municipality on real estate. The amount is based on the assessed value of the property and the local tax rate.

2. Capital Gains Tax: If you sell a property for more than you paid for it, you may owe capital gains tax. The rate depends on how long you've owned the property and your income level.

3. Mortgage Interest Deduction: You can deduct the interest paid on a mortgage used to buy, build, or improve your home.

4. Depreciation: For investment properties, you can depreciate the property over a set period, reducing your taxable income.

5. 1031 Exchanges: This allows you to defer capital gains tax by reinvesting the proceeds from a sale into a similar property.

Feel free to ask any questions or share your own experiences!