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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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If I sell a part of my property and keep my primary home

Customer Question

If I sell a part of my property and keep my primary home attached to the other property to fund my retirement do I have to pay Capital Gains Taxes on the sell of that monies . I am 62 yrs of age and my only other income is Disablity and Widows benififits .
JA: I love the idea of making big money with investments, but there are so many things that could go wrong. The Accountant will be able to help you. Is there anything else important you think the Accountant should know?
Customer: No ; I would like to get an answer to this question before I put it on the market .
Submitted: 6 months ago.
Category: Capital Gains and Losses
Expert:  Lane replied 6 months ago.

Hi. My name's Lane. ... I can help you here

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I'm so sorry, but yes, becasue you are not selling your residence as part of the sale, you'll have to pay capital gains tax on this portion.

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Now, When you sell the adjacent land before you sell your home you would generally have to report the gain on the sale of the land as a capital gain on Schedule D. BUT if you later sell (within two years) your home and qualify for the exclusion, you would file an amended return for the year you reported the sale of the land.

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You would apply a portion of the exclusion to the gain on the sale of the land and request a refund of the tax.

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But there's another issue here.

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Becasue it's likely that your other income isn't taxable, it's possible that some of this will not be taxable.

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Long-term gains are taxed at

  • 0% if taxable income falls in the 10% or 15% marginal tax brackets
  • 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets

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ANd finally, it's possible that (becasue capital gains tax is a part OF tyaxable income, it could make a some of social security taxable, depending on how large the gain is.

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But yes, the gain would be taxable, although likely not at a rate above 15%

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If you'd like to give me your other total income (exactly what that income is - social security vs private disability, etc) and how much the gain on the sale is (sales price of that land minus cosy basis in ot)

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I can run the numbers for you.