Capital gains

Henny4 · #1 (**permalink**) 04-15-2015, 05:56 PM

I was deeded some land from my grandparents in 1982 while they were still alive. It had mine and three siblings names on one section of land. I am now selling my shares to my sister. The amount we agreed on is below the taxable value. Do I pay capital gains on the amount I was paid minus the amount it was worth in 1982? Also do I still have to pay the real estate taxes for the next year after I sell it?

Wnhough · #2 (**permalink**) 04-16-2015, 08:16 PM

I was deeded some land from my grandparents in 1982 while they were still alive. It had mine and three siblings names on one section of land. I am now selling my shares to my sister. The amount we agreed on is below the taxable value. Do I pay capital gains on the amount I was paid minus the amount it was worth in 1982?=======>>BELOW THE TAXABLE VLAUE??? it depends.
Capital Gains are taxes that you specifically pay when you are selling something of your own such land;for 2015, the long term capital gain tax rate for taxpayers in the 10% and 15% tax bracket range is 0%. The tax rate for taxpayers in the 25% to 35% tax bracket range is 15%.

Also do I still have to pay the real estate taxes for the next year after I sell it?====>>No; YOU, the seller, should pay the taxes from the beginning of the real estate tax year until the date of closing. The buyer should pay the real estate taxes due after closing. This way, the buyer and seller only pay the real estate taxes that accrued during the time you actually owned the property. As you no longer own th eland, the new owner of the land, your sister, needs to pay pty tax on it.

Henny4 · #3 (**permalink**) 04-16-2015, 08:46 PM

Quote:

Originally Posted by Henny4

I was deeded some land from my grandparents in 1982 while they were still alive. It had mine and three siblings names on one section of land. I am now selling my shares to my sister. The amount we agreed on is below the taxable value. Do I pay capital gains on the amount I was paid minus the amount it was worth in 1982? Also do I still have to pay the real estate taxes for the next year after I sell it?

Could you elaborate on the "below value", it depends part? I know the percent I have to pay. I just want to be sure I pay it on the correct amount. Also aren't property taxes paid in the current year actually going toward the last year's taxes?

Wnhough · #4 (**permalink**) 04-17-2015, 10:17 PM

Quote:

Originally Posted by Henny4

Could you elaborate on the "below value", it depends part? I know the percent I have to pay. I just want to be sure I pay it on the correct amount. Also aren't property taxes paid in the current year actually going toward the last year's taxes?

Could you elaborate on the "below value", it depends part? I know the percent I have to pay. I just want to be sure I pay it on the correct amount. ===>>>>>>I guess I confused you. It was actually my question. I mmean what do you mean by ” The amount we agreed on is below the taxable value.” I do not understand what below the taxable value means.

Also aren't property taxes paid in the current year actually going toward the last year's taxes?====>>Correct, the principle applies aslongas you still own the pty instead of selling the pty. When you buy / sell a home during the year, though, special rules apply; you can claim any federal income tax deduction for partial-year property tax payment. You need to divide the number of days in the tax year 365 by the number of days that you were the owner of the property. you can include each day of the tax year up to, but not including, the date of the sale.then, you need to subtract any special assessment taxes on your property tax bill from the bill total. These taxes are used for specific purposes, including maintenance and construction of streets, sidewalks or sewer lines, and cannot be deducted.
If you mean you sell it at a loss, then you can not claim capital asset loss on your return.
As said, when selling it, you pay the taxes from the beginning of the real estate tax year until the date of closing.

Henny4 · #5 (**permalink**) 04-18-2015, 02:39 PM

Quote:

Originally Posted by Wnhough

Could you elaborate on the "below value", it depends part? I know the percent I have to pay. I just want to be sure I pay it on the correct amount. ===>>>>>>I guess I confused you. It was actually my question. I mmean what do you mean by ” The amount we agreed on is below the taxable value.” I do not understand what below the taxable value means.

Also aren't property taxes paid in the current year actually going toward the last year's taxes?====>>Correct, the principle applies aslongas you still own the pty instead of selling the pty. When you buy / sell a home during the year, though, special rules apply; you can claim any federal income tax deduction for partial-year property tax payment. You need to divide the number of days in the tax year 365 by the number of days that you were the owner of the property. you can include each day of the tax year up to, but not including, the date of the sale.then, you need to subtract any special assessment taxes on your property tax bill from the bill total. These taxes are used for specific purposes, including maintenance and construction of streets, sidewalks or sewer lines, and cannot be deducted.
If you mean you sell it at a loss, then you can not claim capital asset loss on your return.
As said, when selling it, you pay the taxes from the beginning of the real estate tax year until the date of closing.

The value of the land based on the tax accessment is $1200 per acre and we agreed on $1000 per acre so I just want to make sure I pay capital gains on the amount I actually received vs the value.

Wnhough · #6 (**permalink**) 04-18-2015, 04:49 PM

Quote:

Originally Posted by Henny4

The value of the land based on the tax accessment is $1200 per acre and we agreed on $1000 per acre so I just want to make sure I pay capital gains on the amount I actually received vs the value.

No. You incur a capital loss when you sell land for less than its adjusted basis. as said, a land sale is considered a loss if you sell it for less than its basis. For most assets, this is the amount you originally paid plus any transaction fees. The difference between cost, i mean basis, and sales price plus expenses of sale would be treated as a capital loss reported on Sch D. since the land you sell is not your primary residence, you can write off your capital loss to the extent that you incurred a net capital loss for the year. You can exclude up to $3k per year in capital losses if you are filing married and jointly, or $1.5k if you are married and filing separately. If your capital loss exceeded the applicable limit, you may carry forward the excess loss to future tax years