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Ellen
Ellen, Consultant
Category: General
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Experience:  attorney and legal researcher
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Is ther a capital gains tax exemption for the blind

Customer Reply

Customer: replied 8 years ago.
Where a legally blind but otherwise competent 92 year old female who has an annual income of approximately $18,000 from Social Security and $15,000 in interest income from money market funds, and who has been exempt from filing an income tax return for many years sells three acres of developed land in Tumwater, Washington for approximately $425,000 in 2007, all of which is attributable to the land, and later in 2007, purchases real estate elsewhere in Washington as her primary residence without using the proceeds of the Tumwater sale, are any capital gains tax avoidance or mitigation strategies available with respect to the income from the Tumwater real estate transaction?
Expert:  The Geezer replied 8 years ago.
The sale of the land is a taxable event, generating a long term capital gain, no matter what the subsequent use of the funds might be. There is a personal exemption for the blind, but no capital gains tax exemption.

Had the land been sold in a 1031 Exchange (which would have required the proceeds be used for a like-kind transaction within specified time limits) the long-term capital gains tax might have been deferred (but not avoided).

The taxpayer is to be congratulated on the sale. The long-term capital gains tax rate is still 15%, a rate all W-2 wage earners will envy. But there is nothing to be done to reduce, defer, or eliminate that tax.