Taxes are a fact of life for U.S. citizens, and it is no different in Philadelphia. Philadelphia residents must pay taxes to the state of Philadelphia and a separate tax to a local municipality. The biggest difference between federal and state income tax is that you cannot reduce your PA taxable income with itemized deductions or personal exemptions, while you can with the federal return.
One of the types of taxes that many people do not understand is the capital gains tax. The capital gains tax in Philadelphia is levied on the net gain from the sale of a personal asset. What does this mean? It means that you must pay a percentage of your profit in taxes.
If you have questions about whether you may owe capital gains tax or how much you may have to pay, an experienced attorney can help.
Capital gains taxes have been implemented because, when people make money off assets, they are not required to work for it and therefore do not have any payroll taxes taken out, such as Social Security or Medicare, to pay back into the system.
A capital gain is generally a profit. If you sell an asset for more than you paid for it, the difference between the sale price and the amount you paid for it is a capital gain.
The most common capital gains are from realizing shares as share prices rise, but they can also occur as a result of rises in land values or other assets such as art and antiques.
Philadelphia state capital gains tax is a form of tax levied on the value an asset has gained over time. A capital gain occurs when you sell an asset for more than what you bought it for. For example, if you had bought apples for $1 and then sold them later for $2 each, that’s a capital gain of $1 per apple. They are levied at both the state and the federal level.
In Philadelphia, any capital gains are taxed the same way as income, at a capital gains tax rate of 3.07%.
There are a number of scenarios in which you may make a capital gain and have to pay tax on it in Philadelphia:
You may be able to avoid paying capital gains tax on the sale of a home if:
Don’t let your taxes add to your stress. Call a lawyer today to learn how we can assist.