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I bought a lot 9 months ago for 50K and plan to sell it soon

for arounf 90k. Will I...
I bought a lot 9 months ago for 50K and plan to sell it soon for arounf 90k. Will I have to pay capital gains tax? I am in Louisiana.
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Answered in 1 minute by:
8/29/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,875
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D. :

Hello and thank you for using Just Answer,
Almost everything you own and use for personal or investment purposes is a capital asset. When a capital asset is sold, the difference between the basis in the asset and the amount it is sold for is a capital gain or a capital loss.

Robin D. :

The gain on the sale will be a short term gain and will be subject to capital gains tax.

Customer:

Is there any way to reduce the cost or a way around it such as a property exchange?

Robin D. :

In addition, high income taxpayers may have a 3.8% unearned income Medicare contribution tax applied to their capital gains and other net investment income.

Robin D. :

You could do a 1031 exchange. This would defer the gain till the replacement proeprty was disposed of.

Customer:

Disposed of? What is the current capital gains tax rate?

Robin D. :

Disposed of (ie; sold)

Customer:

In my situation I would have to pay taxes on the potential 40K in profit?

Robin D. :

The rates are dependent on your filing status and income. Short term rates are taxed at your regular rate.

Robin D. :

That is correct. It is the gain (difference in basis and sale price ) that is taxable

Customer:

Thank you you have been very helpful.

Robin D. :

You are most welcome

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,875
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Robin D.
Robin D.
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Category: Tax
Satisfied Customers: 15,875
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Experience: 15years with H & R Block. Divisional leader, Instructor

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