Could I have been taxed twice?

Question

I sold some property last year.I paid taxes on the sale AT THE TIME OF THE SALE. I just recently had my taxes done and had to pay sales tax again. Is it possible I had to pay the same taxes twice? Something does'nt seem right. One more question.If my tax guy made a mistake and I am owed money will the IRS let me know?

Answer 1

I think you need to go back to your tax guy with your closing statements and your tax return and have him explain what is going on.

I believe you are confusing several different types of taxes. Sales tax is assessed by the state and local unit of government and not the IRS. Sales taxes are usually are not involved in the sale of most building (modular homes are considered a vehicle so sales tax does apply), but there is a Transfer Tax which is a similar type of item.

There are also property taxes involved. Depending on your jurisdiction you either pay property taxes for the year ahead or for the year that is already passed. When closing on a house the property tax are prorated between buyer and seller based on time lived in the house compared with the time frame those taxes are for. One or the other will owe part taxes the other will pay.

If you are part of the property taxes paid at closing and you deducted those taxes on your tax return you will need to "recapture" (or add back into income) those taxes. The government does not want you to claim taxes that you did not owe. A similar thing happens with income tax refunds.

With the case of income taxes, if you did not live and own the property for 2 out of the last five years, then you would have had some capital gains taxes to pay.

Selling a house is always complicated for tax purposes and is difficult for me to determine exactly what is happening without seeing the actual paper work. Any good tax preparer will go through the tax return with you again to make certain that you understand it completely.

Answer 2

You could be charged for a capital gains tax the second time and not sales tax. I don't think real estate is a sales tax item. If you sold it for more than the original purchase price, this is most likely what you are being charged.

Did you do a conversion? Did you reinvest the money into another "like" property? In this case it is a 1031 swap and you should not be taxed.

The IRS will not let you know if your guy made a mistake.

Answer 3

What kind of property are you talking about? If it's real estate, you didn't pay any sales tax on the sale. Real estate is not subject to sales tax. Some jurisditictions charge stamp duties or recording fees for processing the deeds. Those are fees for a service and are not deductible taxes. You can add them to your cost basis to reduce the gain on sale though.

When you file your tax return, you may have to pay tax on the gain you realized from the sale of the property. It's part of your income tax liability, it is NOT a sales tax.

Answer 4

Possibly. I never heard of sales tax on real estate. You need to go back to your tax man and get some education. Since sales tax is a state function, check with your sales tax dept.

Answer 5

Yes.