Capital gains tax and property tax are two completely different taxes.
Capital Gains Tax on Property
• What it is: A tax on the profit (gain) you make when you sell a property for more than you bought it for.
• When it is paid: Only when a transaction or sale occurs.
• Rate: Based on how long you owned the property:
• Short-term (held 1 year or less): Taxed at your ordinary income tax rate (up to 37%).
• Long-term (held more than 1 year): Taxed at 0%, 15%, or 20% depending on your income.
• Exemptions: If the home is your principal residence and you lived in it for at least 2 out of the last 5 years, you can exclude up to $250,000 of profit if single, or $500,000 if married filing jointly. Investment properties can also use strategies like a 1031 exchange to defer the tax.
Property Tax
• What it is: An ongoing, recurring local tax (ad-valorem tax) levied annually by local governments based on the assessed fair market value of your real estate.
• When it is paid: Every single year, whether you sell the property or not.
• Rate: Set locally by cities, counties, or school districts to fund public services like police, fire departments, and schools.
• Deductibility: You can often deduct a portion of your annual property taxes on your federal income tax return (subject to the $10,000 SALT cap under current tax law).
cite
cite