When it comes to selling a home, every Arizona homeowner needs to be aware of the expenses they can expect. For starters, there are capital gains taxes.
These are the tax obligations that you have when you sell your home. If you own a home, it is important to know how capital gains taxes work and what to expect when selling your property in Arizona.
Capital Gains in Arizona
This is actually worth a call to your tax preparer or CPA. Taxes can be complicated, but they don't have to be. Sometimes with write offs, expenses of the sale of the home, it’s not as significant as you would think. But at least it can still be avoided if you live in the home for 2 out of the last 5 years.
The capital gain is the difference between what the home is worth today and what it was worth when you purchased it. This tax applies if you sell your home for more than you paid for it.
A Seller pays capital gains in Arizona unless you own your home AND have lived in it for at least two of the last five years, you may be able to avoid paying capital gains tax. This is because the IRS in Arizona allows homeowners who meet this requirement to exclude up to $250,000 ($500,000 if married) of gain from taxation.
Arizona property taxes are collected by your county government, and are based on the assessed value of your home. There are many factors that determine how much property taxes you will be assessed, including the value and location of your home. The higher the assessed value of your home, the higher the property taxes.
Arizona property tax rates are actually below the national average. The rate is 0.610 in Maricopa County, so a $350,000 home will be about $2,135 a year. The highest rate in Arizona is Pima County 1.01%.
The lot size and improvements of the lot of your Arizona home will also affect your tax bill. The more land you have, the higher the property taxes. This is because there are fewer people who live on larger lots and therefore there is less tax revenue.
How are Property Taxes Paid
Most people with a home mortgage will pay into an impound account and the loan servicer will automatically pay and make sure that the taxes are paid.
The impound account is a special type of account that is set up for homeowners with a mortgage.
The homeowner has to pay into this account each month and the lender will automatically make sure that the homeowner's property taxes are paid, that the homeowner has insurance on the property, and most importantly, they will make sure the loan is repaid on time. Protecting the mortgage investor from unpaid tax liabilities.
Homes with no mortgage or with a servicer without an impound account will have to pay the state directly:
The County Treasurer’s office handles property tax assessment and collection, so contact them for more information about how your property was valued and to pay your property tax.
Arizona’s Tax Plan 2021
The Arizona governor has unveiled his budget for the upcoming fiscal year, and it looks like it will be a very competitive one. The governor's budget is meant to be leaner than previous years, which should help lower taxes.
The new property tax reform legislation introduced in this year’s budget will reduce property taxes on small businesses and job creators by 10 per cent, and increase the homeowner’s rebate. Under this provision, the state would cover 50% of the homeowners’ primary property taxes. The homeowners would still be responsible for the other half.
With the current worries about the housing market, many people are wondering what their home is worth today. It is not uncommon for mortgages to be worth less than your home, so it is important to know what your home value is if you are going into another purchase or refinance.
Home Valuation Tool gives you the answers you need in just minutes. We have a simple and easy-to-use tool that will give you a valuation of your property in just a couple of clicks. You can also do an instant comparison with other properties for sale in your area.
Home Valuation Tool