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Capital gains tax on vacant land

I bought a house of 2 acre for 300$. I divided off 1 acre. So if I sell the land and house I can avoid capital gains. The house is currently worth 500$ and the vacant land is worth 300$. If I can sell the land only, I will have to pay capital gains on it. How do I figure out as to how much I will get taxed on? what is the tax rate of capital gains?

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Melinda,

The maximum long term capital gains tax rate is 15%. But if you sell the vacant land, then you are actually adding a large amount to your other income. So, you may have to pay taxes in a much higher bracket. This may also cause your deductions/exemptions/tax credits to be limited.

You may also have to pay Alternative Minimum Tax. So your tax liability may be more than 15% on the gain itself.

Thanks,
Caron.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Live in arizona and selling land vacant(timber on it) in Louisiana have had land for over 45 years. Have 44 acres. what % of tax would I pay on this. We are boyh 66.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Rosemary,

You will probably be in the 15% capital gain tax bracket. For details on any kind of relief availability you should contact a good tax accountant in your locality.

He will also help you in calculating the total tax to be paid based on your purchase cost.

James

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am selling one and a quarter acre of vacant land that I.ve owned since 1966. I am 67 years old. What would be my tax costs?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

On vacant land, the tax will be more as you are adding considerable amount to your income.

Normal rate is 15% but you need to know the exact prevailing rate on vacant land.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Dad inherited 60 acres 20 years ago. Has now deeded it undivided to myself and brother and Sis. Selling is now being considered. What is the basis for the tax? We will obviously be selling for more than the land was purchased for many years ago, and more than it was worth when dad inherited. He deeded it to us just under 2 years ago.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi MC,

So far I understand there will be gift tax to be paid by you on selling the property.

A real estate attorney can help you more efficiently on the tax related matters attached to the land sale.

James

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Selling .14 acre of vacant land. Do not own any other property. Have this parcel since 2002. Will I have a capital gain tax? How much?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lupe,

Welcome to the forums.

Usually when a person sells property, he has to pay capital gains tax on the gain incurred through the sale. There is an exemption available in this case but it will depend on certain conditions.

The capital gains tax is not indexed to inflation. The tax rate keep changing depending upon the following factors:
[list:9f03130e4d][*:9f03130e4d]The type of your asset
[*:9f03130e4d]Your cost basis (the purchase price of the asset)
[*:9f03130e4d]Your income
[*:9f03130e4d]The length of time you held the asset prior to the sale[/list:u:9f03130e4d]You may also refer to the discussions on Capital gains tax and Exemption from capital gains tax for more information on this issue.

I shall also suggest that you consult a tax advisor regarding how much you have to pay for capital gains tax.

Thanks,

Sara

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

selling land, purchased 1937, I am 93, how much capital gains will I pay?

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larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Albert,

The amount of the capital gains tax that you may need to pay depends on the sale value of your property. If you make more profit on selling the property, then you may have to pay a greater amount of tax provided you do not qualify for the capital gains exemption limit.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

HELLO, I WANT TO SELL TWO LOTS TOGETHER ,ONE I HAVE HAD FOR FIVE YEARS (PAID 23K) AND ONE FOR ONE YEAR(PAID 8K).I EXPECT TO GET AROUND 95K MINUS 7 % REALTOR FEE.MY WIFE AND I FILE JOINTLY ON ABOUT 90K INCOME. WHAT RATE OF CAPITAL GAINS TAX CAN I EXPECT? THANKS, DENNIS

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helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Dennis.

The capital gains taxes are calculated on federal as well as state level. However, not all states have separate capital gains tax rates. Rather the capital gains are treated as ordinary income and as such subject to the state income taxes. Also the tax rate varies with the income tax bracket under which you come in.

I think it's better if you can consult an accountant or a tax preparer.

Thanks.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I bought 38.5 acres of vacant land 8 years ago for 45k. This land was used for hunting. We just sold it for 80k in 2007. One month later we bought 40 acres of vacant land for 80k. This will also be used for hunting. Will we have to pay capital gains taxes on this?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Rhonda,

Welcome to the forums.

You'll ahve to pay capital gains tax on the land sold off for $80K provided you don't qualify for capital gains tax exemption . But you need not pay tax on the land bought.

Take Care

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My sister in law sold a parcel of land in Arizona for $15,000.00. She lives in New York and is 70 yaers old. How much capital gains tax does she have to pay? What is deducted from the sale price to determine cost basis for calculating tax? Are closing costs allowed to be deducted from sale price?

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Jim.

The Capital Gain tax implies on (sale price – adjusted basis).

And the adjusted basis= the initial purchase price + maintenance & improvement cost – depreciation cost if there is any.

BTW your sister in law can get exemption on capital gain tax up to $250,000

Hope it is clear. Let me know if you have any further queries.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Does the zero tax rate apply to long term capital gains on vacant land in 2008. I have a gain of $160,000.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Dick!

As far as I know, you will have to pay a tax of around 15%. I don't think that the zero tax rate will apply on a vacant land. You can check the following link to find more about it:
http://www.mortgagefit.com/vacant-land.html

Thanks.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I bought a lot for $34,000 in 2001. The value was as high as $450,000. I sold in 2008 for $120,000 because I decided not to build. I used the money but intend to buy a home. Can I defer taxes on the land and claim the profit toward a future purchase?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello my girlfriend has an acre of land in florida with back taxes due and she cant pay them and she wants to sell me the land for what she paid for it ,whats the best way to transfer and does she have to pay capitol gains on it if i only pay her a little at a time, shes had it several years, any info would be helpful , thanks Rick

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To Dara,

I don't think you can defer taxes on the land and claim the profit toward a future purchase. Better consult a tax expert in this regard.

To SlickRick,

If the property is transferred to you then you will be liable to pay the back taxes. To transfer the property in your name, she will have to sign a quitclaim deed. As it's only a transfer, she will not have to pay the capital gains taxes. But before the transfer, she should inform the lender.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We bought 3 1/3 acres 19 yrs ago for 8k. Selling it for 50k, how much capital gains taxes on this. My husband is retired (age 60) and I'm still working (age 56). Our combined income 83k. We plan on using the 50k to build a garage and improving our current home.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hey Angie,

A question similar to yours has been answered in the given link:
http://www.mortgagefit.com/tax/capitalgains-vacantland.html#77519

Please check it out. I hope it will help you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

will have 100% cap gains on 9.5 ac in CA if I sell for 75K...also self emp as Avon Lady and get Soc Sec (age 72). But don't make over 15K a year, so do I still have to file taxes + Cap gains? At my age, I can make 30K/year and not file...thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Get in touch with a tax adviser and he would be able to guide you in a better way in this matter.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My mother in law inherited land in Lousianna with her sister.Her sister has died and her niece has said the land is now in her name.Does my mother in law have any recourse, since she never signed away her 50% of the land?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Julia,

If your mother's name is mentioned on the property deed, then she will be considered as one of the owners of the property. Thus, the niece will not be able to claim the whole property as her own.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I bought 10 acre 10 years ago for $50,000. built a barn and driveway for $40,000 when I refinanced. I deducted the morgage interest on income taxes. If I sell will I have to pay taxes on profit? what if I use money to buy a primary residence or rental property?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guinness,

As you're the owner of the property, if you sell it off and receive a profit, you'll have to pay capital gains tax for the same. If the property was used as a primary residence, then you'll be able to lower the tax payments to some extent.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am planning to sell a vacant that my father gave to me over 50 years ago. According to the City of Virginia Beach the land is worth a little over $100,000. Do I have to pay capital gain on the amount I sell the property for which is approximately $65,000?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Eugene,

As you're the owner of the property, you'll be liable for paying the capital gains taxes if you receive a profit from the sale of the property.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My father (who is in his late 60's) owned property in Costa Rica. He owned the land and a home on the land. However, the home was demolished 3 yrs ago b/c the home was vacant and looters had set up living quarters there. He sold the land through a POA this past month and told me he wants the money of the sale divided amongst his 3 children. The money is sitting in a bank account in C.R. What is my responsibility in terms of taxes? Is this considered a gift? Do I have to report to IRS and pay state and federal taxes? Does he have to report the income as his, since he technically will not received it? He says he does not want to be involved in anything that has to do with us getting the money. He is a cranky old man and it is hard to communicate w/him. He told me to contact the POA in C.R and I have. There is $39,000 after expenses to be divided. Any input is appreciated. Thank you

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi IJ,

Your query has been replied to in the given page:
http://www.mortgagefit.com/budgeting-finance/about45534.html#188171

Take a look at it. Hope it helps you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i have a piece of land that i have over $2,000 in taxes on for several years can I figure this expense into my cost basis as I have never took this expense off a tax return

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You should contact a tax adviser and take his opinion in this matter. He will guide you in this regard.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Selling land in Montana- paid 26,000.asking 65,000. we want to take the profits and buy a condo in Florida- will we still pay capital gains on this land .

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi

My dad passed away i got some land i sold it now i am on disabilty and have been for a few years i make less than 700.00 month do i pay taxes on what i sold the land for.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Bonnie,

If you invest the money in purchasing a real estate, then you may not have to pay capital gains taxes.

To Al,

If you sold off the land for a profit, then you will be liable for paying capital gains tax.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

if I sell a land of 1984 [got from father's propety--if he purchased on 1940and divided on
1984] if sell as per valuation---in 38 thousand -how much tax to be paid

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi nirmal,

Your query has been replied to in the given page:
http://www.mortgagefit.com/budgeting-finance/about48693.html

Take a look at it. Hope it helps you.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I bought a home in 2005. I lost the house in a hurricane and paid off the mortgage $177,000 and I did not rebuild and its a vacant lot.

Now its 2011, I am about to sale my vacant lot for $55,000. Do I have to pay any capital gains tax? Technically its a loss on my part.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome solrak,

If you receive a profit by selling off the vacant lot, then you will be liable for paying the capital gains taxes. If you won't earn any profit from it, then you won't have to pay any taxes.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What are the tax consequences as compared to inheriting it at her death?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Pat!

Welcome to forums!

If the parent transfers the property to the child as a gift, then the parent will be liable for paying gift taxes.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

hi, I am considering selling some vacant land i have owned for over 15 years for a good profit. there is some land next to my residence for sale. if i sell the land and buy the other land do i not have to pay capital gains on the profit.
thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

As you will be re-investing the money once you sell off the property, you may be able to offset the capital gains. But, your best option will be to contact a CPA and take his suggestions.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband purchased a recreational lot in 1972 and is now selling this lot for $159,000. Is there any way to avoid paying CGT?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Bonnie!

Welcome to forums!

If you make profit from the sale of the property, then you will be liable for paying capital gains taxes. However, if you flip your existing home for some other home or swap ownership, then you may be able to avoid capital gains taxes.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we purchased 115 acres +/-,we have owned for 26 yrs. we are closing on the sale of this land,we gave 15,000.00 and now selling it for 132,500.00, we were married at the time of purchase we are now duvorced, she has no taxable income and i had 9,000.00 taxable income in 2010.she is 64,Iam 75. are there any type of exemptions for low income,and what tax bracket may we be in,she is to get half and i get half.thank you.

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