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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Capital Gains and Losses
Satisfied Customers: 263
Experience:  Over 20 Years experience in resolving tough tax cases
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We sold our farm for 2 mil... aftr debts we got 1 mil....we

Customer Question

we sold our farm for 2 mil... aftr debts we got 1 mil....we also carried back a note for225,000 due in 5 years.... this was also our main residence for about 20 years...the realtors said it is your home you are selling so you are ok with capital gains......our cpa says we owe about 200,000 in capital gains....we are 78 and 80... we are practically disabled..my husbands is having a double heart surgery and I am not able to work...so do we owe this money.........
Submitted: 4 months ago.
Category: Capital Gains and Losses
Expert:  emc011075 replied 4 months ago.

Hi. My name is ***** ***** I will be happy to help you. Capital gains are calculated as followed:

Sales price

- purchase price

- improvements

- selling expenses, including RE commission

+ depreciation

= capital gains.

If the the farm was also your principle residence, you qualify for 500K capital gains exclusion but you cannot exclude the depreciation you took over the years. Did you use the farm to generate income? Did you reported farming income?

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