Taxes on Selling a Phoenix House in Arizona

Taxes are one of those topics that will leave you perpetually confused while learning it, but they will inflict hefty consequences if you don’t understand them. Even tax professionals still get confused despite years of industry experience.

Every transaction we make involves taxes. Whether we know it or not, we still pay tax on every purchase. The larger the transaction, the larger the tax. At least, that’s the general consensus.

Learning about taxes becomes imperative when selling real estate, which often involves thousands or millions of dollars. Heading into a real estate transaction with sufficient tax knowledge could cost you money and stressful legal troubles.

Different Types of Taxes Paid When Selling a House in Phoenix, AZ

If you’ve decided to sell your Phoenix property via the traditional house sale pipeline, you could expect a longer timeline and more expensive expenditures on top of essential taxes. Here are the types of taxes you must pay when selling a house.

Capital Gains Tax

Capital gains tax is imposed when selling an asset above the acquisition price. In simpler terms, it’s the tax you pay for the profit you’ll make when your house is sold.

Take this for example. Suppose you bought a house worth $400,000. After three years of living in it, you and your spouse decided to sell it at $800,000. The government will demand a capital gains tax from the $400,000 added to the sale price.

Capital gains tax is divided into different fractions: 0%, 15%, or 20%. Your length of residence in the property for sale determines how much capital gains tax you must pay. The longer you reside in the house, the lower the taxes will be.

Property Tax

Property taxes in Arizona vary per county. The average property tax in Arizona is 0.45%, with the highest coming from Pima County (0.89%) and the lowest from Apache County (0.34%).

In Arizona, property tax is paid bi-annually. You must pay the first installment every October 1st and the second every May 1st. When selling your property, you’ll only have to pay for the duration when the property is under your name. The new homeowner will pay the upcoming installment after the sale of the property.

Transfer Tax in Arizona

Thanks to Proposition 100, Arizona homeowners don’t have to pay transfer tax when selling their property. Transfer tax is typically a standard part of property sales in almost every state, often costing around 1% of the total property sale price.

Despite the advantage Proposition 100 provided, some local lawmakers are attempting to reinstate transfer tax in the state. Fortunately, none have come close to approval.

Other Fees to Pay When Selling a House in Arizona

Taxes are not the only obligations eating up your finances when selling a property through the traditional home sale process. Other expenses, such as the following, will burden you:

• Home Repairs and Improvement: You need to make your house more attractive to potential buyers, which entails paying an expensive sum for repairs or improvements.
• Real Estate Agent Commission: Hiring a real estate agent is essential in the traditional method, and you — in most cases — have to pay them in commission.
• Ongoing Utilities: Even if your house is unoccupied, utilities will continue running, even if minimally. You still have to pay for these expenses.
• Other Legal Fees: You still have to pay title fees and closing costs when you close a property sale.

This list is not exclusive to all expenses you have to pay when selling a property. Doing intensive research before putting a property up for sale is critical.

Do These Taxes Apply When Selling an Inherited Property?

Generally, yes. All of the taxes above still apply even if you inherited the property.

Arizona does not impose inheritance taxes to relieve some burden off your shoulders. Unlike most states, the local government won’t demand payment for every property you inherit.

The property tax still applies similarly. A slightly different approach to capital gains tax would apply to the beneficiary. The step-up in basis would apply to inherited assets.

In a “step-up in basis,” the basis of the capital gains tax would be adjusted (or stepped up) to the property’s current market value. In turn, this adjustment would lower the capital gains tax owed.

For example, a property was bought at $250,000 five years ago. The homeowner died, and the first child was named beneficiary of the property. At this point, the property is valued at $400,000. When the new owner decides to sell the property, they only have to pay what the difference is between the sale price and the current market value instead of its original value five years ago.

How We Can Help You Save More

With all the taxes and accompanying costs, selling a property will cost you a fortune. Despite its promising return, there’s no guarantee you’ll set your property at your intended price. Sometimes, you have to lower the cost to make a sale.

At Doug Hopkins, we will buy your house as-is. You won’t have to pay a dime to prepare your property for sale. We’ll buy it in any condition. Here’s your guide to our process:

1. Complete our survey form.
2. Agree to our offer.
3. We’ll handle the purchase process.

You can have your money in less than a week rather than wait for 48 days, the average time a property cycles in the marketplace before closing a sale.

What Do We Mean by As-Is?

We mean it as it is — no hidden agenda or anything. We’ll buy your house even if it’s run down or has existing legal issues. We’ll buy your house in any state or condition. Whether you’re downsizing, moving to a different state, or simply wanting to get rid of your property, we’ll buy it from you.

Is Doug Hopkins Legit?

Is Doug Hopkins legit? We would certainly say so. However, it’s better if you take the words from our past clients. Click on this page to view reviews from homeowners we helped secure a sale in the past.

Sell Your Phoenix House to Doug Hopkins Now

Selling a house is logistically and financially troubling. Without certainty that your house would sell at your set price, or if it would sell at all, you could be pouring money down the drain.

At Doug Hopkins, we buy houses Phoenix and we provide the certainty of fast cash sales without conditions. If you need quick cash for your Phoenix property, complete our survey form and start our house sale process today. It will only take you five minutes or less.