A question about a land sale and taxes.

Discussion in 'The Okie Corral' started by M2 Carbine, Mar 17, 2017.

  1. M2 Carbine

    M2 Carbine

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    My Wife and I bought the land (we have lived on) about 1967.

    A couple months ago I sold a little of the (unimproved pasture) land.

    The "cash value" of the land has increased a little over 46 times what we paid for it in 1967.

    Sounds like a lot but the selling price today, corrected for inflation, would equate to what we paid for the land in 1967.
    When we bought the land the locals told us we paid too much.
    I sold the land for a little less than I could actually have gotten for it, to do someone a favor (long story).

    So my question, for anyone that may know, Lawyer, tax expert about land sales, etc, is, does something like this come into taxes some how, "Capital Gains",etc. ?

    I called the IRS. They were totally useless.
     
    Last edited: Mar 17, 2017
  2. huskerbuttons

    huskerbuttons

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    I have no help for your situation, only to say, the last two sentences are the Gods honest truth.
     
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  3. Al Czervik

    Al Czervik

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    Buck, you will owe long-term capital gain on the land. IRS Publication 551 might be of help. I would talk to a CPA if it is a great deal of money.
     
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  4. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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  5. GamerGirl

    GamerGirl 100% Relevant

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    Yeah only a primary residence is exempt from taxes when you sell iirc unless you immediately buy another house with a few exceptions.
     
  6. M2 Carbine

    M2 Carbine

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    No, it was just a cash sale.

    I'm thinking that, whatever, this would be included when I file 2017's Federal Taxes, but I could be completely wrong and I have to take care of it now.


    Who said, when you retire your taxes will be lower?
     
    Last edited: Mar 17, 2017
  7. willie_pete

    willie_pete NRA Life Member

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    Capital gain, but check with a CPA/attorney. There is a possibility that half of it could be revalued to the date of your wife's passing if it was in both of your names and she passed it to you in her will. That would shield at least some of the gain from when it was purchased until her date of death.

    wp
     
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  8. M2 Carbine

    M2 Carbine

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    Interesting.

    Texas is a community property state. When my Wife died there was no Will.
    Having no kids, everything that was "ours" automatically becomes "mine".
     
  9. 2bgop

    2bgop

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    You will owe cap gains on at least a portion, unless you can do a 1031 exchange.
     
  10. Al Czervik

    Al Czervik

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    1031 sale must be performed by a Qualified Intermediary, identify exchange property within 45 days of sale, and purchase said property in 180 days, IIRC.
     
  11. M2 Carbine

    M2 Carbine

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    By "exchange" I assume you mean some kind of land swap or buying more property?

    No, it was just a cash deal.

    The (high dollar) horse ranch across the road is owned by a (very nice) very wealthy lady.
    I sold her the land just because she needed it. I have no interest in buying anything else.
    So, it sounds like I'll have to bite the bullet and pay taxes on the money (even though I sold it below the current market value).

    Have I said, I hate Property Taxes. :)
     
  12. 2bgop

    2bgop

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    Here is a wiki link to the 1031 exchange. https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031

    If you have not interest in buying another piece of property, then it really doesn't matter. You will just need to check with you CPA to see if you have any options to not pay cap gains on the entire profit.
     
  13. M2 Carbine

    M2 Carbine

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    I'll have to check if any friends know a CPA.


    Man, things have become so complicated.

    When we bought the land I stopped in a bank (I didn't know) and asked if they wanted to carry the note on the land. Maybe I signed my name three times.

    I signed my name maybe twice on the land "papers".


    When I sold the land, I know I signed my name, at a title office, at least thirty times.

    They asked if I wanted a check or if I wanted them to deposit the money in my bank checking account?

    I said deposit it and save me a trip to the bank.
    Later I saw they had charged me $15 to send the money to the bank.
    It wouldn't have cost me less than 50 cents in gas to drive to the bank. :)
     
  14. M2 Carbine

    M2 Carbine

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    Thanks for all the info.

    I believe it's put me on the right track to resolving the problem.
     
  15. refugeepj

    refugeepj

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    grab your ankles, here comes the IRS.
     
  16. Glockblock6653

    Glockblock6653

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    Did you talk to LaQuanda?
     
  17. Jonesee

    Jonesee

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    Your math is totally incorrect.
    Adjusting for a 3% annual inflation rate and compounding would quadruple the value of the land over the same period. It would not multiply the value by a factor of 46.

    It may have increased by a factor of 46, but that is not the inflation rate, that is the appreciation rate.
     
  18. eagle359

    eagle359 Glock Fanboi

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    And if the IRS tells you something, they can not be held responsible if what they told you is WRONG.
     
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  19. M2 Carbine

    M2 Carbine

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    No, "inflation" wasn't a good example.

    Put it this way.

    When we bought the land we paid about the going price per acre.

    When I sold the land I received about the going price per acre.

    In other words, I have actually not made a profit (Capital Gains) at all.
    The Dollar figures just changed.

    Today, if I bought the land, it would realistically cost me me same as we paid back in 1967.
    The dollar figure has changed but the buying power is the same.

    So now, if I have to pay "Capital Gain's Tax" from the money I just received for the land, I could not buy the land again.
    Effective I haven't broke even.
    I've actually lost money by selling the land.


    I did say I hate the Federal Government, didn't I. :)

    .
     
    Last edited: Mar 17, 2017
  20. volky

    volky NRA Member Millennium Member

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    Take a seat facing the door.
    If i got cash for something, I would never tell the .Gov.