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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have land to sell which I invested in for the purpose of

Resolved Question:

I have land to sell which I invested in for the purpose of development. This is not happening and want to sell but also want to avoid the capital gains tax on the sale. What are my options.
Submitted: 4 years ago.
Category: Tax
Expert:  Wallstreet Esq. replied 4 years ago.
What state are you in, and what price did you purchase it for and plan on selling it for?
Customer: replied 4 years ago.

I purchased 20 acres for $20,000 eight years ago during the other slump.

I am asking 55,000 and I live in Minnesota.

Expert:  Merlo replied 4 years ago.

HelloCustomer

 

Any time that you sell property, whether it was property held for personal use or as an investment, you are going to be liable for capital gains tax on the sale. The only way at all to defer the tax is by participating in a 1031 Exchange. This will not actually relieve you of paying the taxes at some point in time, but it will defer them.

 

A 1031 Exchange is when you use the proceeds from the sale of one investment property to purchase another investment property. So if you sell the property for $55,000 and then reinvest that $55,000 in to another investment property, you would defer any tax which was due until such time as the second property was sold.

 

Other than participating in a 1031 Exchange, there are no other options for not paying the capital gains tax on the sale. If you sell the property for $55,000 and have a basis of $20,000, you would have a long term capital gain of $35,000. This would be subject to 15% federal tax and mN state tax of approximately 7%. So your total federal and state tax on this gain would be approximately $7,700.

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank youCustomer/p>

 

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 4 other Tax Specialists are ready to help you

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