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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?
I'm a litttle confused....I'm sorry.....
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
ok...........I'm with you now. Thank you for your clarification
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)
Conditions to include the sale of vacant land as part of the main home (opening the door for the $250,000 home exclusion)
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,
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.
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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.
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
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
Please scratch that last number
$500 x 50 = $25,000, and that would be her taxable gain
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%)
I hope this helps
thanks we are done
Somehow I accidently checked a box that stopped you from being able to rate and pay.
You should be fine now
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