When buying or selling a home, it’s important to know how real estate taxes will affect your transaction. In this article, we’re going to look at West Virginia’s real estate tax structure and fill you in on what you need to know.
Whether buying or selling, county, state, and federal taxes can greatly affect your profits and expenses when closing on a property in West Virginia. These taxes can vary widely between different states and even different counties, so if you don’t already know about West Virginia real estate tax, then there’s no better time to dive in than right now.
Will You Have to Pay Taxes When You Sell Your Home in West Virginia?
For the most part, homeowners do not need to pay taxes when selling their home. Currently, homeowners that have owned and lived in the property being sold for at least two out of the last five years only need to pay taxes if their profit exceeds $250,000, or $500,000 if they are married. In addition, you must not have excluded the amount gained from another home sale within two years of the current one.
This is referred to as the ownership and use test. While it appears straightforward enough, there are a few special cases, such as divorce and military service that can make it more complicated.
If you’re divorced and have come into ownership of the property as part of the settlement, then you can count the period of time your former spouse lived in the home towards the required two years. The same applies to acquiring ownership due to the death of a spouse as long as you have not remarried before the date of the sale.
You are also allowed to count short, temporary absences towards the two-year requirement, even if you rented out the property during that time. If you are a member of a uniformed service, you can count the time you were on duty as well, so long as you were required to be stationed at least 50 miles from your home, or under government orders and resided in government housing.
How Much Are Real Estate Transfer Taxes in West Virginia (and Who Pays Them)?
A transfer tax, often referred to as an excise tax, is just what it sounds like: a tax paid when certain types of properties, in this case real properties, are transferred from one owner to another. For the most part, it’s calculated as a percentage of the final closing price.
In West Virginia, there is a state deed transfer tax of $1.10 for every $500 of property value, or $2.20 for every $1,000 of property value. This comes out to 0.22% of the final closing price.
In addition to state transfer tax, individual counties in West Virginia also charge their own excise tax on real property transfers. These rates vary widely and can be substantial: in Mercer County, for example, the transfer tax rate is an additional $1.10 per $500 of property, so the total cost of state and county excise tax comes to 0.44% of the final closing price. In order to ensure that you meet all state and local tax requirements, it’s best to work with a qualified real estate agent who can help walk you through the buying or selling process.
While some states specify whether the buyer or seller pays, West Virginia does not. However, when buying a previously owned home, the seller usually pays the transfer tax. Determining who will be responsible for the transfer tax is another way an experienced real estate agent can be of assistance.
How to Calculate Property Taxes in West Virginia
Property taxes are calculated based on the assessed value of the home. A local property assessor will determine how much your home is worth, usually by comparing it to other properties that were recently sold or estimating how much it would cost to build a home. The total value of the property is then multiplied by the local tax rate, also referred to as a millage rate.
The average West Virginia property tax rate is 0.59%, but this figure will vary widely from county to county. In Mercer County, for example, the property tax rate is 0.523%, or $1,020 per year on a $250,000 home, while in Jefferson County the rate is 0.676% or $1,318 per year on a home of the same value.
In order to make sure you have accurately budgeted all the costs of homeownership, we recommend that you speak with a real estate agent who’s knowledgeable about your target market. Working with a professional will ensure that there are no costs that slid under your radar and will come back to haunt you down the line.
Tax Breaks for West Virginia Home Buyers & Sellers
It is possible to get certain tax deductions whether you’re a buyer or a seller. For buyers, an example of this would be deducting interest paid on your mortgage, while sellers are able to deduct the cost of sales-related repairs and improvements.
Tax Breaks and Credits for Buyers
Mortgage interest: Interest paid on a mortgage can be deducted from your federal income tax payments. So long as the interest was accrued during the tax year and you don’t have over $750,000 in mortgage debt, you should be good to go.
Property tax: As long as your property tax was not used to pay for a specific service or community benefits (improved infrastructure, etc.), and you paid the tax either at close or to a tax authority during the year, you’re eligible for a deduction. Currently, you can deduct a maximum of $10,000 between state and federal taxes.
Property held by those over 65 years old or disabled: In West Virginia, the first $20,000 of assessed property value held by those over the age of 65 is exempt from taxation. This also applies to those who are permanently or totally disabled.
Tax Breaks and Write-Offs for Sellers
Improvements and repairs related to the sale: Some repairs or improvements that were made to increase the value of the home before selling are eligible for tax breaks. Examples of eligible repairs include removing lead paint or mold, and examples of improvements include solar panel installation and window replacement.
Selling costs: The costs associated with selling a home are eligible for tax deductions. These include advertising costs, hiring a real estate agent, and more.
Property taxes: Just like buyers, sellers can also deduct their property taxes. The same limitations apply to sellers, and the maximum deduction is $10,000.
Mortgage interest: Homesellers can deduct the interest they paid during the part of the year in which they owned their home. Those who got their mortgage before December 15, 2017, can deduct interest on up to $1 million of mortgage debt, while those who got it afterward can only deduct the interest on up to $750,000 of mortgage debt.
Tax breaks and exemptions can be a complicated topic and vary greatly from region to region. In order to make sure you’re getting the maximum savings, find a certified tax professional or accountant to work with.
Whether you’re buying or selling, a qualified and experienced real estate agent is a vital part of any successful real estate deal. For buyers, Clever Partner Agents offer a $1,000 rebate in 40 states to cover closing costs. Working with a Clever Partner Agent also gets you access to on-demand showings so that you can act fast on your dream home before it’s too late.
If you’re selling your home, you can list with a Clever Partner Agent for only $3,000 — and you only pay if it sells!