The American taxation system is quite intricate. Besides federal and state income taxes, there are local taxes such as city and county taxes that are imposed on real estate property once a year. Florida is one of the few states that does not collect state taxes. However, the Federal Income tax declaration is required to be filed once a year by all American citizens, temporary residents and non-residents, who are receiving income in US territory. Funds are collected based on the tax brackets below.
Numerous expenses can be deducted from the income to lower the taxable amount. Examples are interest dollars paid on a mortgage, travelling expenses, property taxes etc. Property taxes are collected by counties and cities according to the property value.
Capital gains tax is collected from the profit made by selling a property. There are different legal ways to lower or avoid paying taxes on gain from selling property. The U.S. government rewards investors by omitting capital gains taxes for those who follow certain rules and re-invest in various properties after selling the original property. The Internal Revenue Code Section 1031 is a powerful tool for deferring capital gains tax on commercial/investment transactions. This Section allows taxpayers to exchange real or personal property for new property, while deferring recognition of any capital gains. It is suggested to consult our professional tax adviser regarding filing tax declaration.