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Anne
Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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My Mom is 89 years on SS with no other income just sold part

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My Mom is 89 years on SS with no other income just sold part of her original home stead property for $100,000.00 what tax implications will she have?

Anne :

Hi

Anne :

Thank you for using justanswer

Anne :

When you say your mother sold part of her original homestead, are you referring to some extra parcels of land she had purchased along with her homestead?

Customer: No it was part of the original not separate
Anne :

I'm a litttle confused....I'm sorry.....

Anne :

How many acres did your mother originally buy with her home, did she ever use the portion she sold off for business. such as a farm maybe...............and do you know how much of her purchase price, plus the of any improvements would be allocated to the land she sold

Customer: she inherited this property and this has been her own a home no agriculture and originally 75 acres she sold 50 of those acres
Anne :

ok...........I'm with you now. Thank you for your clarification

Anne :

Ok. since she inherited the property, her cost basis is whatever the Fair Market Value was at the time she inherited the property, plus whatever she's done to improve the land (and home, subject to condition explained below)

Anne :

Conditions to include the sale of vacant land as part of the main home (opening the door for the $250,000 home exclusion)

Anne :

 


Vacant land.


 



 


The sale of vacant land is not a sale of


 


your main home unless:


 



 


The vacant land is adjacent to land containing your home,


 



 


The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land,


 



 


and


 



 


The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land.


 



 


If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain.


 



 



 



 



 



 

Anne :

This information was found on page 3 of ]


2012 Publication 523 - Internal Revenue Service

Anne :

 


I truly hope this information is helpful but please do not rate until you are satisfied. If you want to click on 1 or 2 just click on the continue to work with me button instead. You will then be able to add any other info or respond to what I have posted so far. Rating 3-5 gives me credit and a good rating but you can still converse with me.


 

Anne :

Please come back to this thread if you have follow up questions

Customer:

The land was all together house and all she sold 50 acres of the 65 acres and kept the house and 15 acres she inherited this property in the mid to late 70s and property value then was about $1,300.00 to $1,500.00 per acre if that. So what kind of tax is she required to pay if any and if so when.

Anne :

IF she sells the home and the remaining 15 acres within 2 years of the sale of the 65 acres, she would be able to use the $250,000 primary home exclusion . If her sales price was > than $250,000, or if she doesn't sell the home and the rest of the acreage within 2 years, she could pay up to 20% on the GAIN

Anne :

So, if the inherited basis is $1500/acre, and she sold 50 acres @$2000)acre (50 x $2000 = $100,000) then her gain is $500/acre or $10,000

Anne :

Please scratch that last number

Anne :

$500 x 50 = $25,000, and that would be her taxable gain

Anne :

This additional amount will make some of her SS taxable, however her standard deduction of $7300 plus her personal exemption of $3800 should wipe out any taxable SS, and should leave her only paying capital gains (which in her income level should be 15%)

Anne :

I hope this helps

Customer:

Good Answer

Customer:

thanks we are done

Anne :

Somehow I accidently checked a box that stopped you from being able to rate and pay.

Anne :

You should be fine now

Anne :

I'm glad that my answer helped you, and please don't hesitate to come back to Justanswer in the future.

Customer: replied 3 years ago.
already rated to your service and I already did as excellent I don't know what happened to it
I want to thank you for the excellent rating, and apologize for the trouble you had with rating me.

Please feel free to ask for me by name if I can help you in the future.