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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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capital gains tax

Resolved Question:

I sold a vacant lot in South Carolina in 2007 for a profit of $80,000. I plan on buying a new house in 2008 in Florida. I will use the $80,000. for a down payment. My question is do I have to report the $80,000. gain on my 2007 tax form? Will I be taxed on the $80,000?
Submitted: 9 years ago.
Category: Tax
Expert:  RD replied 9 years ago.

Did you go through a intermediary and are planning to do a Sec 1031 exchange?

Customer: replied 9 years ago.
Reply to RD's Post: I sold the property using a lawyer. I do not know what you mean by a Sec 1031 exchange.
Expert:  RD replied 9 years ago.

In that case, you will owe capital gain tax on gain on sale of the land. You will not be able to save tax though you are going to use the funds as a downpayment.

Normally if you do a sec 1031 exchange and buy a like kind property- meaning sell investment propert(land) and buy another investment property(not your personal residence) than you can defer tax on gain. But you need to go through an intermediary and hence you not qualify for this deferral,



Let me know if you have any question.


Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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