The transfer tax is an essential consideration when purchasing or selling real estate in Indiana. When ownership of real estate property is transferred from one person or business to another, a fee known as a “transfer tax” is charged. The transfer tax in Indiana is enforced at the county level, so the rate may change based on the location of the property.
So, is there a transfer tax in Indiana? Yes, it is the answer. The transfer tax in Indiana is $2 for every $500 of the sale price of the property. The transfer tax, for instance, would be $800 if you sold a property for $200,000 instead. The buyer and the seller normally share the transfer tax, though this can be discussed in the sales contract.
It’s crucial to understand that transfer tax is not the same as property tax. While transfer tax is a one-time payment made at the time of the transfer of the property, property tax is an annual charge depending on the assessed value of the property.
You might also wonder if the proceeds from home sales count as income. The common response is no. The sale of a principal residence is subject to different tax laws than regular income since the IRS views it as a capital gain. You may exclude up to $250,000 of the capital gain from your income as of 2021 if you are a single taxpayer or up to $500,000 if you are married filing jointly and have owned and resided in your principal house for at least two out of the previous five years.
There are a few exceptions to this rule, though. For instance, you may receive a different tax status if you used your house for commercial reasons. A tax expert should always be consulted to fully understand your individual tax status.
In conclusion, it’s crucial to include the transfer tax as part of your financial calculations if you’re buying or selling property in Indiana. Although the rate is relatively low in comparison to other states, depending on the sale price of the property, it can still add up to a sizeable sum. It’s also crucial to comprehend the tax ramifications of selling your primary house and how they could affect your entire financial strategy.