What Are the Tax Benefits of Purchasing Property in Nevada?

Nevada has many tax benefits, most notably the lack of state income tax. If you own property, though, you may be able to get some relief from capital gains taxes on the sale of your main home as well as taking advantage of some of the country’s lowest property taxes.

If you’re looking for a new community to call home, you may want to consider Nevada. Not only is the state beautiful and full of opportunity, but it also offers several tax benefits for those who purchase property there.

It’s a beautiful state. While Las Vegas is a significant source of tourism and revenue, it’s not the only draw. Keep reading to learn more about these benefits and how they could impact your decision-making process.

The Joys of Owning Property in Nevada

Why would anyone pack up their family and move them to the desert? You may be surprised. 

But Nevada understands how many people feel, so they offer tons of benefits for anyone willing to pack up their lives and move to another state.

Deductions/Tax Help

One of the biggest advantages of owning property in Nevada is the lack of state income tax. It can save you a significant amount of money if you are retired or otherwise have a low income.

In addition, Nevada has some of the more affordable property taxes in the country. The state has a 3% tax cap on primary residences, which can possibly save you hundreds or even thousands of dollars each year.

Owning property in Nevada also comes with a number of other benefits, including a large selection of quality homes, excellent schools, and low crime rates.

Capital Gains Taxes

When you sell your home, you are typically required to pay taxes on the money you make from the sale. This profit is referred to as capital gains. However, there is an exclusion for this tax, up to $250,000, if you have lived in the home for at least two of the past five years.

This exclusion can save you significant money, allowing you to keep more of the profit from your home sale. The idea here is that money you save will be reinvested locally, such as in a small business.

Home Renovations for Medical Reasons

If you make certain home improvements that are related to your health, you may be able to deduct the cost of those improvements from your taxes.

This can include anything from adding a wheelchair ramp to installing special medical equipment. Be sure to speak with a tax professional to find out if your home improvement project qualifies for this deduction. If you’re going this route, there’s a chance you can also deduct from your federal taxes as well.

Your Mortgage May Help Save Money

There are some advantages to owning property in Nevada if you have a mortgage. First, the interest you pay on your mortgage is tax-deductible.

In addition, if you should ever default on your loan, Nevada law provides some protections for homeowners. For example, it’s possible to declare part of your property a homestead, making it off-limits to creditors.

Finally, you may be eligible for special protections under the Servicemembers Civil Relief Act if you are a military member. This act provides benefits for active-duty military members, including a reduced interest rate on their mortgage.

Tax Credits on Your Mortgage

Are you are a first-time homebuyer? You may be eligible for a mortgage tax credit. This credit can save you up to $2,000 yearly on your taxes.

To qualify for this credit, you must meet specific income requirements and purchase a home that is your primary residence. Speak with a tax professional to see if you qualify.

Points

Mortgage points are a type of pre-paid interest that can be used to reduce your interest rate and monthly payments. One point is equal to one percent of your loan amount, and they are typically paid at closing. Mortgage points can be a good option if you plan on staying in your home for a long time, as they can save you money over the life of the loan. 

If you paid points to secure your mortgage, you might be able to deduct those points from your taxes. To be eligible for this deduction, the points must have been paid in order to secure a loan for your primary residence.

Building Up Your Net Worth Can Save on Taxes

If you make certain improvements to your home, you may be able to deduct the cost of those improvements from your taxes. This can include anything from adding a new room to your home to installing a new roof.

Be sure to keep records of any improvements you make, as you will need to provide proof of the expenses to deduct them from your taxes.

State Property Taxes

While Nevada does not have a state income tax, it does levy property taxes. The amount of property tax you will pay each year depends on the value of your home.

Nevada’s average effective property tax rate is 0.56%, which is substantially lower than the national average.

Nevada property taxes are an essential part of the state’s budget. They fund several vital services, including public schools, law enforcement, and infrastructure.

Tax Rules

Nevada’s property tax laws are designed to be fair and easy to understand. The state uses a system of assessment and taxation that is uniform across all counties.

This means that each property is taxed at the same rate, regardless of where it is located in the state. Nevada also has several properties exempt from property taxes, including public buildings and properties owned by religious organizations.

If you have any questions about Nevada’s property tax laws, you can contact the Nevada Department of Taxation for more information.

State Tax Rates

The amount of property tax you will pay each year in Nevada depends on the value of your home. This is where the uniform assessment and taxation system across all counties comes into play.

So each property is taxed at the same rate, regardless of where it is located in the state. The median property tax paid per year is just over $1,700. Washoe County collects a bit more, at almost $1,900. Esmeralda County brings in the lowest amount, at just over $400 annually.

These taxes are based on property value. This likely means that the residents of Washoe County, at least on average, own much more personal property than those in Esmeralda County.

Property tax rates vary slightly from county to county in Nevada. Clark County is one of the lowest, at .65%. But there are a couple of counties that are right at 1%, such as Mineral County and Pershing County.

State Tax Advantages

The high cost of living in Nevada is a turnoff for many people. However, the state offers several tax advantages that can offset the cost of living. For instance, Nevada has no state income tax, which can save residents a significant amount of money.

You can also save some cash on your mortgage, deduct points, and many items are exempt from sales tax as well.

The state also has low property taxes, and businesses are exempt from paying sales tax on certain items. As a result, there are multiple ways to save money by living in Nevada.

Nevada has long been known as a favorable tax environment for businesses. The state does not have a corporate income tax, and it also offers some other tax advantages.

For instance, Nevada allows businesses to deduct the cost of employee health insurance premiums from their taxable income. It can be significant savings for companies that provide health insurance to their employees. 

In addition, Nevada has an above-the-line deduction for certain research and development expenses. This deduction is available to businesses of all sizes, making it an attractive option for companies that are engaged in R&D activities. 

FAQ

What are the tax advantages in Nevada?

Nevada has several tax advantages, including no state income tax, low property taxes, and businesses are exempt from paying sales tax on certain items. 

How does Nevada property tax work?

Property tax in Nevada is based on the value of your home. The state uses a system of assessment and taxation that is uniform across all counties. This means that each property is taxed at the same rate, regardless of where it is located in the state. 

However, individual counties add their own property taxes rates, increasing the overall amount of money you’ll spend on what you own.

Are property taxes cheaper in Nevada?

Yes, property taxes are cheaper in Nevada when compared to other states. Overall, Nevada is in the country’s top ten of most affordable property tax rates.

Property tax Nevada vs. California

Property taxes in Nevada are significantly lower than in California. The state tax rate in Nevada is .65%, while California’s is .73%. Some individual counties have an overall lower rate than some of the more expensive areas in Nevada. But for the most part, there are more savings to be had in Nevada.

Nevada property tax exemption

Some exemptions can lower your property taxes in Nevada. For instance, homeowners over the age of 65 may qualify for a senior citizen exemption. It’s a statewide program that refunds as much as $500 to eligible residents.

Other exemptions include the disabled veteran exemption, the orphan exemption, and the widows/widowers exemption. Each of these services substantially decreases the taxable value of your home to help residents save money.

Why do people move to Nevada?

One of the most common reasons people move to Nevada is for work. The state’s strong economy and low unemployment rate attract many job-seekers. 

Nevada’s income tax rates are zero, making it a good choice for people who want to keep more of their earnings. 

Another draw for new residents is the state’s diverse landscape. From the snow-capped mountains of the Sierra Nevada to the desert landscapes of the Mojave, there is something for everyone to enjoy. Regardless of the reason for moving, the state has much to offer newcomers.

How much does it cost to live in Las Vegas?

The average house in Las Vegas now costs more than $400,000, while renting a studio apartment will likely cost you over $1,000 a month.