No More Tax Woes With a Capital Gain Tax Exemption on Sale of Property

The deal is done—you’ve found someone who loves your home and is offering the right price, and you are looking forward to the financial rewards of having sold at a higher price than you bought for years ago. Then the crash—the IRS steps in and demands a huge slice of the profit you have made under the title of capital gains tax (CGT).

CGT affects anyone who sells an asset for more than they paid for it. Thankfully, DoNotPay can help you access a capital gain tax exemption on a sale of property and save your money.

What Is Capital Gains Tax?

Capital gains tax is levied on any increase in the value of an asset that you sell. This applies to:

• Cars
• Stocks
• Shares
• Collectibles
• Real estate

You only pay capital gains tax when you sell your property, and it is a once-off charge that is recorded when you fill out your annual tax return. It is different from property tax, which is paid annually for as long as you own the property and is separate from your annual income tax returns.

Before you sell your property, it is worth investigating what the CGT implication will be so that you can plan accordingly.

The first step is to understand what kind of CGT you will be liable for.

What Are the Types of Capital Gains Tax?

There are two types of CGT—which one applies to your property sale depends on your situation:

1. Short-term CGT
2. Long-term CGT

Short-Term CGT

Short-term CGT is applicable to you if you sell your property within a year of buying it. In this case, the U.S. Government does not set special CGT rates but rather regards any profit you make as normal income and expects you to file it as such. It will then be taxed at your usual income tax rate.

Long-Term CGT

If you have owned your property for more than a year, you are liable for long-term capital gains tax. The tax you pay is based on your status and income, and there are four statuses and three brackets that determine the tax percentage.

The CGT tax rates are much lower than the income tax you pay, so it is worthwhile to hold on to a property for more than a year.

Long-term CGT is dependent on your income and filing status and uses the following rates:

You can avoid CGT altogether if you fall into the lowest annual income bracket. There may also be other ways to avoid being liable for capital gains tax.

How Can I Get an Exemption From Capital Gains Tax When I Sell Property?

If you have owned your home for a minimum of two years and have lived in it for that time, it qualifies as your primary residence. In this case, you may gain an exemption from the capital gains tax, as long as you haven’t claimed any other CGT exemptions in that time.

The exemptions available are based on the amount of capital gain—profit—you have made. The IRS typically allows you to write off $250,000 in capital gains if you are single and $500,000 if you are married and filing jointly.

DoNotPay can help you check your eligibility for this or any other exemption.

DoNotPay Can Help You With Property Tax Too

If tax is a worry, you may also want to think about the other big hit you take every year—property tax. Even if you live in a state with low property tax, it can still add up to a significant annual hit. DoNotPay is your go-to resource for help with property tax exemptions.

There are many exemptions that are widely available, including:

• Homestead exemption
• Senior citizens’ exemption
• Veterans’ and disabled veterans’ exemptions
• Disabled persons’ exemption

Our app checks where you live, gathers some basic information about you, and generates customized advice on what exemptions you can claim for. The app has two sections:

How Do I Get DoNotPay’s Property Tax Guide?

Our guide is easy to download—you only need to follow these instructions:

1. Using any web browser, sign up for DoNotPay and find the Property Tax feature
2. Answer the questions about yourself and your property
3. Wait while the app generates a customized guide to your property tax reductions

Use DoNotPay To Help You Lodge an Appeal

If you are looking for further ways to reduce your property tax liability, there are several things you can do that may help you pay property tax:

• Always check your tax bill for accuracy
• Be around when the assessor appraises your property
• Avoid making any improvements to your property that will significantly increase its value

If you do all of these and still feel your property tax assessment is unfair, you have the option of appealing it. The process can be daunting, but DoNotPay can help you learn what you need to do and where you need to lodge your appeal.

DoNotPay Breaks Down Communication Barriers

Communication and new technologies walk hand in hand, and DoNotPay can smooth out any bumps on that road. On our platform, you can find useful tools for avoiding phishing emails and text messages, sending faxes online, stopping annoying robocalls, or signing up for new services without phone verification.

Contacting customer support is no party, but DoNotPay can make the process so much easier, whether you need to request a refund, demand compensation for a canceled flight, or file a warranty claim.

You can even use our platform for locating your loved ones in prison and sending them letters the proper way!

Can Your Virtual Assistant Do This?

Hey, Siri! Make me ready for my upcoming small claims court appearance. No luck? OK, Google! Prepare a DMCA notice for that website that uses my photos without authorization. Still nothing?

DoNotPay is the virtual assistant that won’t back away from issues that require legal expertise. Our lawyer bots work around the clock to get you due date extensions for utility bills, reduce your property taxes, or stop stalking and harassment before it gets ugly.

The world’s first robot lawyer will provide assistance even with securing compensation for victims of crime!