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OP
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I have a cousin who is in the process of selling a parcel of land that is attached to his acreage,
and has owned it for over 30 years.
He ask me if I knew anything about capitol gains taxes, I told him no, but would ask on campfire.
LOTS of knowledgeable people on here!
He says he bought the land cheap, 30 years ago, and is wondering if he has to pay capitol gains taxes on this,
Because he is making a substantial profit on it.
Thanks!
Virgil B.
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Campfire Kahuna
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I am MAGA.
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Campfire Ranger
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If it was his primary residence, no capital gains on the first $500k if married filing jointly? Add costs for improvements, depreciation etc…
Not sure how it works if he’s just breaking off part of the land and selling it though.
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Campfire Ranger
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~Molɔ̀ːn Labé Skýla~
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Campfire Regular
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I just did one of these, "like property" is a rule. he has to buy a "like property" for investment purposes. and OH, I think you only have maybe 90 days to identify the "like property" and you have to have it bought in 180 days (IIRC)
Last edited by strikeu; 10/09/21.
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Campfire Ranger
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Campfire Ranger
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I would ask a good CPA... BEFORE he sells... for recommendations.
A good CPA might say sell the whole parcel (including the primary residence) with a contract in place to buy back the residence as part of the sale... buy it back as a person or a Trust?
I am NOT AN EXPERT, but if shady hollywood producers and politicians can scam the rules... I will also.
1031s can be complicated... I looked into one once... but did not proceed.
If you are not actively engaging EVERY enemy you encounter... you are allowing another to fight for you... and that is cowardice... plain and simple.
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Campfire Tracker
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Campfire Tracker
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Have him talk to a good accountant.Together they can identify the tax liability and discuss different options to pursue. He should ask the accountant about proposed tax legislation and how those changes might effect him in the future if passed. Also remember in a tax exchange he is going to be buying into the top of the market same as he is selling in now.
Last edited by Boarmaster123; 10/09/21.
Life can be rough on us dreamers.
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OP
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I was thinking an accountant would be a wise move.
I'll advise that to him.
Thanks!
Virgil B.
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Campfire Tracker
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Not only are there Fed cap gains, there are most likely state tax implications as well. CPA or tax attorney is the smart move before signing anything.
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1031 are a good way to reinvest.....but if you want and or need the cash...probably have to bite the bullet and pay up.....bob
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Just went through this last year when we sold or property in Sisters and made a substantial profit on it.. lucky I had records of every improvement we made on it or would have gotten raped on the capital gains. As it was I had to pay around $35K in capitol gains after talking to an accountant. Couldn't use the 1031 exchange because we had already bought a new property- even though it was not yet paid off....
Best advice everybody is giving is to get some good advice from a CPA. Money well spent IMO....
Bob
Never underestimate your ability to overestimate your ability.
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Buy a tractor or a truck etc
Happy Trails
Bob
FUGK CCP
It’s time to WAKE UP GOD BLESS THE USA WWG1WGA THERE ARE NO COINCIDENCES
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Campfire Member
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If you sell the land before the primary residence, it is taxable based on the proportionate share of the total basis. However, if you then sell the house within two years of the sale of the land, and the land was used as part of your primary residence, the sales can both be considered to qualify for the primary residence exclusion. You can then fille an amended return for the year you sold the land to reclaim the amount of capital gains tax paid on the sale of the land that wouldn''t have been due if both sales were treated as a single sale.
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Went through a senerio very similar to what's described here.
Tax man wasn't cutting no check, funds due to me came in the form of a tax credit that took a few years to exhaust.
Just sayin'
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Campfire Tracker
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Get CPA advice not campfire advice................................................................................................................HINT
If you find yourself in a hole....quit digging
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My lawyer is first, CPA second.
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Get CPA advice not campfire advice................................................................................................................HINT Pffft. No shortage of CPAs, financial advisors, attorneys, or physicians willing to offer free advice on the campfire.
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He ask me if I knew anything about capitol gains taxes, I told him no, but would ask on campfire.
LOTS of knowledgeable people on here!
Virgil B.
Always my first stop for financial advice too.
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Campfire Outfitter
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Does your buddy need medical advice also? Lots of that here if he wants to take a chance....
Never underestimate your ability to overestimate your ability.
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