I inherited some MN farmland in 1992 valued at approximately $80,000. Today the estimated value of the land is about $320,000, or, a $240,000 gain, if sold. My 2011 "effective tax rate" was 6.07%. What is my extimated MN cap gain tax AND my fed cap gain tax on this scenario if I were to sell it immediately?
just some on line research
If the property was worth $80K at the death of the prior owner, then your gain is $240K. Federal Cap gains rate is 15%, so the federal tax is about 36K.
States do not have a separate capital gains tax rate, so it just goes in with all your other income. Not knowing your other income, the maximum MN rate is 7.85% on all income over $134K. The tax rate is 7.05% of the amount between 33K and 134K, so figure on amount 7.5% on average.
That assumes you file jointly. If not, the tax rates start at a lower income.
Of course, this will give you a MN tax of about $18K, which is then deductible on the following year tax return. This will save about $2400 to $4500 in federal tax in the following year.
our joint tax rate was 6.07 in 2011. does this change anything?
Joint tax rate for what?
And do you mean "effective" tax rate?
There is no 6.07% tax rate in America.
Effective tax rate = total income tax divided by Adjusted Gross Income
When our taxes were completed and submitted, the very botXXX XXne on the submittal form says that our "effective tax rate was 6.07%", that is what I mean.
It is what I indicated above. Just total income tax divided by AGI.
It does not tell me anything really useful or that would change my answer further up.
Have a profitable day!
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