When people sell their house, they’re often focused on what the eventual sale price will be. But there are plenty of financial considerations to keep in mind because based on closing costs, mortgage payments, and concessions, the sale price eventually gets whittled down to your overall net profits. One major concern you’ll want to be aware of is the kind of taxes you’ll have to pay when selling a house. Here in Nebraska, there are very specific taxes you’ll need to know about and plan for. Let’s take a closer look at the taxes on selling a house in Nebraska.
Taxes On Selling A House In Nebraska:
Capital Gains Tax
The biggest tax you’ll need to be aware of no matter where you live is capital gains. This is the appreciation that gets you a profit when you sell your house. Currently, the federal capital gains tax rate is either 0%, 15%, or 20%, depending on your income and household status (single, joint, head of household).
For example, if you file jointly with a yearly income of $80,000, you will have to pay 15% in capital gains. Let’s say you sell your house and earn a profit of $20,000, you’ll have to pay $3,000 in capital gains taxes. So you can see how capital gains have a huge impact on the profits you take away from the sale.
That said, it’s possible to avoid capital gains taxes through a capital gains exclusion in the code. Federal tax law allows the first $250,000 in profit by a single filer or first $500,000 in profit by joint filers to be tax-free. Of course, any profits above those amounts will be taxed as normal.
In Nebraska, your capital gains are also treated like any other income. So that means you will have to pay state taxes on those profits as well. Once again, the rate depends on your income and will vary between 2.46% and 6.84%. So even at the lowest rate, if you ended up with $20,000 in profits on your home sale, that’s an additional $492 in tax payments. Combining federal and state taxes, that $20,000 becomes $16,508.
Document Transfer Fees
It might be referred to as a document transfer fee, real estate transfer fee, or stamp tax, but whatever it’s called this is a required payment to offset the costs of recording deed changes and other documentation filed with state and local governments.
Nebraska has a document transfer fee of $2.25 per $1,000 in the assessed value of the property. So if the assessed value of your house is $200,000, the fee would come out to $450. Usually, the buyer and seller split this fee, but it can also sometimes be negotiated as part of the sale.
There are exemptions to paying the document transfer fee, but they are usually around specific situations, including when a deed is transferred from a trust to beneficiaries, a partitioning of property, mortgage transfers, or death. It should also be noted that your Nebraska county or city may also impose their own real estate transfer fee on top of the state one.
Technically speaking, Nebraska does not collect a property tax aside from the document transfer fee. However, local counties, cities, school districts, and other agencies will levy property taxes of their own. It should be noted that property taxes in Nebraska are higher than the national average because of this decentralized system. The average property tax rate comes in around 1.83% (seventh-highest in the nation) but will vary from municipality to municipality. It’s not uncommon to live in a county where the property tax is over 2%.
Property taxes in Nebraska are calculated based on the market value of the house and residential properties are assessed to 100% of that value. Those who disagree with their property assessment can always take their concerns to the County Board of Equalization and even file an appeal to the Nebraska Tax Equalization and Review Commission.
If you’re looking to avoid paying high property taxes, you’ll want to look beyond Douglas County, where property taxes soar to 2.08%. Lancaster County has a relatively average tax rate (1.84%) but has high property values, which means higher payments. The county with the lowest property taxes, Wheeler County, is also among the least populated but offers a property tax rate of 0.98%.
Because of the high property tax rates in Nebraska, there is often a lot of talk surrounding changing the system, so be sure to keep an eye on any new state or county regulations or tax code changes if you’re buying or selling.
While not related to selling your house, you should also be aware of Nebraska laws when you inherit property, as this could impact what you do with it. Surviving spouses and charities are exempt from any inheritance tax. However, if you are inheriting property from parents, grandparents, siblings, children, or any other lineal descendant, you receive an exemption up to $40,000 but must pay an inheritance tax on any value above that. That exemption shrinks to $15,000 if you are inheriting property from aunts or uncles, nieces or nephews, or any other relative outside the aforementioned relationships. And if you inherit a property from a person who does not fit any of that criteria, your exemption stops at $10,000. Something to consider when deciding if you want to keep a property you’ve inherited.
Avoid Taxes by Selling As-Is
If the idea of paying all these taxes sounds like too much to give away or a headache to deal with, there is another solution when selling your house in Nebraska. You can sell directly to a real estate investor such as Element Homebuyers. We’ll review the details of your property, present you with a fair cash offer, close on the house as quickly as you want, and let you walk away with cash in your pocket without having to deal with taxes or fees. Plus, we’ll buy the house as-is so you don’t need to make any repairs or worry about fixing any financial issues that exist on the property. There are no commissions or fees and there is no obligation whatsoever if you reach out to get an offer.