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Land sale taxes


 
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Seia
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PostPosted: Tue Nov 27, 2012 2:16 pm    Post subject: Land sale taxes Reply to specific post Reply with quote

I have an elderly aunt that is selling some land valued at $150,000.00. I read in a local paper that many individuals that want to sell land are doing so before the end of this year because taxes will be higher next year on the sale income. I sure see alot of land selling now. Is that the reason or just the high price it is bring? Is it better to sell in 2012 or 2013?
 
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The Red
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PostPosted: Tue Nov 27, 2012 2:23 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

Seia long term capital gains taxes rise from 15% in 2012 to 18% in 2013 unless Congress extends current laws. So yes it is better to sell in tax year 2012 where you know the tax rate.
 
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dino in iowa
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PostPosted: Tue Nov 27, 2012 2:40 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

Land is so high now, the gamble is the price, today or next
year up down steady
 
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tomNE
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PostPosted: Tue Nov 27, 2012 2:47 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

before any decision can be made; the word capital gains needs to be understood. anyone selling land that they've bought cheap an now wanna cash in is gonna be hit hard. if someone inherits the land. capital gains has a new base. the value of the land, the day u inherit it.
 
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dhermesc
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PostPosted: Tue Nov 27, 2012 3:03 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

Actually many capital gains will be taxed at 18% instead of 15% even if congress extends the current tax rates.

If they fail to extend the current tax rates on large capital gains will go up to 23%.
 
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ss55
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PostPosted: Tue Nov 27, 2012 3:29 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

There are many factors to consider when selling land. Federal capital gains taxes are now at an all-time low of 15%, down from 20% to 30%. Land prices are at all-time highs. Farm income is expected to be at an all-time high due to high grain prices and big crop insurance payouts. Based on that, land prices should continue to rise, but our do-nothing congress has not passed a farm bill yet, that could affect future farm incomes and land prices.

Your best choice is to talk to a tax accountant from your area to find out what your state and local taxes really are. Don't believe everything you hear in the cafe, bar or internet, take the time to talk to a professional.
 
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Mike (WA)
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PostPosted: Tue Nov 27, 2012 4:12 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

Better to sell in 2012, if only because you know that we have a favorable capital gains tax now, and you don't know what it will be after Jan. 1. Except it will almost certainly be worse for the seller.

"The devil you know is better than the devil you don't."
 
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Goose
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PostPosted: Tue Nov 27, 2012 4:34 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

I think you're referring to capital gains tax. It's at 15% now, but subject to change next year.

My sister and I sold our family farm last month. Our accountant was pleased that we had not only sold it this year, but we got the full price in cash. She was worried about what capital gains will do next year.

Kinda hated to sell it since it had been in the family for 109 years, but time marches on. Our daughter is settled in the Washington DC area, and my sister's four kids are scattered between here and California, so there was no next generation waiting in the wings to take over. Then, my sister and I both owned an undivided half interest, and our attorney had been bugging us to divide it for our own estate planning. But, the farm was configured so it would be impossible to divide it between two people and be fair about it.

So, we decided land prices are high, it's a seller's market, we could control the shots, split the money and invest elsewhere. Plus we prevented the possibility of taking a beating in a forced sale someday to pay medical bills or something else unforeseen at this time.

Actually, we sold it to a longtime friend and neighbor who already owns land on two sides. My wife and I retained a ten acre plot on one end that includes our house and my shop. And I put a clause in the sales contract that I retain deer hunting rights for myself and up to six guests for ten years.
 
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LAA
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PostPosted: Tue Nov 27, 2012 6:40 pm    Post subject: Re: Land sale taxes Reply to specific post Reply with quote

Other factors to consider, how did she aquire the land, if she bought the land then only the value increase over the original purchase price minus cost of non deducted improvements is taxable. If she inherited the land only the sale amount that exceeds the inheritance tax threshold for the year she inherited is taxable, I am referring only to federal taxes, most state taxing agencies pretty much follow the federal lead when it comes to deductions/exemptions but a few do not so it is always wise to check.
 
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