Posted by River City on December 22, 2008 at 09:48:31:
The taxes you pay vary state to state. If you are purchasing the home through a realtor, the realtor should give you an estimate of your closing costs, which would include all taxes paid at closing. If you are not using a realtor, you could contact a real estate attorney or a closing agent (preferably the one that would be conducting your closing) and ask them about the fees associated with the purchase. It is not an unfair question to ask and you should know about your closing costs prior to signing a contract.
I am purchasing a house for rental purposes. It will be the only house I own, but intend to rent it out. Do I pay federal and/or state taxes on the purchase price of the home? Does the escrow company withhold these taxes? I am a cash buyer.
Posted by River City on January 02, 2009 at 07:31:32:
While this is not a “federal” or a “state” tax in the sense you are referring, I paid [at closing to the State of Florida] an intangible tax on the home I purchased in Florida. This is what Florida says about this tax:
“The nonrecurring intangible tax remains in effect. The nonrecurring intangible tax is a levy that is imposed upon the value of all notes, bonds and other obligations for the payment of money which are secured by mortgage, deed of trust or other lien on real property situated in Florida. The one-time, nonrecurring tax is imposed at the rate of twenty cents for each one thousand dollars of value of the note, bond, or mortgage.”
They clearly state that this is a tax based on the value of the note, bond, or mortgage, and not a recording fee. This is the reason I said it could vary by state. If Florida has this “tax” and the CPA’s do not know about it, other states may have something similar.
There are no federal or state income taxes on the purchase of the property. There may be some recording taxes, etc. There are federal taxes on the income and may be states taxes. Discuss with a qualified tax professional.