With world-class casinos, hotels, and entertainment, Las Vegas is a sought-out destination for people around the world; and many visitors soon find they don’t want to leave. If you’re drawn in by the luxurious lifestyle of The Strip, you’ll be happy to know that the city is just as friendly (perhaps more so) to those who want to put down roots and buy property.
Nevada is known for its “tax hospitality,” referring to the generous tax breaks offered to its residents. Homeowners in particular can take advantage of several benefits following the purchase of a home or condo. For those who are already enticed by the beautiful climate and enthralling culture, the following tax benefits make home ownership in Las Vegas all the more attractive.
Tax Breaks and Deductions
1. Property and Real Estate Tax Deductions
Homeowners can deduct both property and real estate taxes by listing them as itemized deductions. Deductions are calculated based on what’s paid during the taxable period (e.g. year), rather than when the taxes are due. In other words, paying your property taxes early may reduce your taxes for the year.
2. Capital Gains Tax Exclusion
Married couples who file jointly can keep up to $500,000 in profit on the sale of a home, tax-free. Couples who file separately can still benefit, with the exclusion capped at $250,000. To qualify, the home must have been owned and used as the primary residence for two out of the five years prior to the sale.
3. Medical-related Home Improvements
Improvement expenses made to benefit people with medical conditions or disabilities (e.g. ramp or railing) can often be deducted. Keep in mind, the deduction is limited to the portion of the improvement cost that exceeds the subsequent increase in the home’s value.
4. Mortgage Interest Deduction
Homeowners that take out a mortgage can deduct the interest they pay, with a balance of up to $1 million. Similar to property and real estate taxes, this tax break is only available if you itemize deductions on your return.
5. Mortgage Tax Credits
The Mortgage Credit Certificate (MCC) Program allows first-time, low-income homebuyers and veterans to take a tax credit of up to 30% of their interest payments. Homeowners can also claim the remaining interest as a tax deduction. Accepted homeowners are eligible for this credit every year that they have the mortgage and live in the home.
When you take out a mortgage, the lender will charge you “points” as part of the cost of your loan — each point is equal to 1% of the loan principal. These points are fully deductible if they are part of a home purchase mortgage. Any points charged as part of a refinanced mortgage are also deductible, but only when they are amortized over the loan’s lifetime.
Selling Your Home
7. Loan Forgiveness
For homeowners who end up selling their home for less than their mortgage is worth (for instance, a home sale of $450,000 on a $500,000 mortgage), Nevada offers loan forgiveness on the difference. The lender will forgive the extra money owed, and you won’t have to pay taxes on that extra amount.
8. Selling and Moving Costs
Selling costs can be reduced from the taxable capital gain of a home — this includes advertising fees, inspection fees, real estate commissions, and title insurance.
9. Capital Improvements
Similar to selling costs, capital improvements made on the home within 90 days of the sale can also be reduced from the taxable capital gain. Qualifying improvements include those related to decorating (e.g. painting, wallpaper) and maintenance and must be intended to help sell the home.
Qualifying loans taken out for home improvements may also be eligible for interest deduction. The home improvement must increase the value of the home, rather than be used solely for maintenance or repairs.
Nevada: (Tax) Friendly to All
But wait — there are more tax benefits residents can enjoy while living in Las Vegas. Nevada is one of the few states that doesn’t collect personal income tax, for instance. On the business end, the state also doesn’t collect corporate income tax nor taxes on corporate shares. Finally, residents who plan to pass property and wealth onto their families don’t have to worry about inheritance, gift, or estate taxes.
Simply put, Nevada’s array of tax benefits make it an attractive state for homeowners and businesses alike. With the tax benefits on your property and the Las Vegas lifestyle at your doorstep, who would want to leave?
Interested in owning a home on the Las Vegas Strip? Get in touch with us today to find out more about the luxury condo homes offered at Sky Condos.