Have a Tax Question? Ask a Tax Expert
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
When you are exchanging land for a condo, is the condo going to be an investment or personal use?
If it is an investment, then you are better off doing a like-kind exchange where you swap the land for the condo. You cannot do this, however, if you are using the condo for personal purposes.
i was thinking for personal use at some point but am not 100% decided...if i swap for an investment and only rent it about a year and then decide to move in...does it being an investment still hold?
Yes, because it was an investment property at the time of the sale.
It's called a 1031 exchange, and it would need to be set up through a qualified intermediary
thank you....what would the taxes be on such a 1031 exchange as no money changed hands...would there be any tax as income at end of year?
The income tax would hit when you sold the condo later on down the road
You are deferring the gain on the sale of the land, but will claim it once you sell the condo
i see...if the developer and i did the 1031 exchange and he paid a little bit as cash for lot, would the cash and cash only be taxed as vast majority would be an exchange...and if so as ordinary income or something else?
You are correct. The cash is called "boot" and if you receive boot the transaction is not fully tax-free
it would be as ordinary income then?....and if the condo is sold by me in a few years, would it be considered a short or long term asset? or does that matter?
or would any boot be considered capital gains and taxed less?
It would be taxed as capital gains. If you have it longer than one year then it would be a long term capital gain
if less than a year it would be short term?...tax wise, do you pay less for a long term capital gain?
Yes, you pay less for a long term gain
is there a set % for short vs. long? do you know what it is?
Short term capital gains is taxed at your ordinary rate.
Long term capital gains are taxed typically at 15% but at 20% if you make more than $400,000 a year, and 0% if you are in the 10-15% tax bracket
ok, would the same apply to sale of condo? if i have it for over a year, it would be long term capital gains taxed at?
Yes, if you had it over one year it would be taxed as a long term capital gain
ok, if i have any more questions i will let you know....thank you...
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hi...what is the 10-15% tax bracket mentioned? thank you....
hi...i have low income...what are the cut offs that qualify one for the 10 to 15% and what if you are at say 0 to 5 to 9%?
hi...on the tax brackets, is the capital gain tax on the amount only that is over, or is the whole amount then taxed? thank you....