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I had an acre years and had a home on it. I payed property

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I had an acre for...
I had an acre for 20 years and had a home on it. I payed property tax every year. I sold the property with out the house on it. I moved the house. The well and septic were sold with the land for 25,000 I want to know was I supposed to pay the IRS every year for my land. I want to know what I will owe in taxes after saling the land this year also. Or do I tell the IRS I sold it.
Submitted: 2 years ago.Category: Tax
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Answered in 2 hours by:
11/8/2015
Tax Professional: Peter Griesch,
 replied 2 years ago
Peter Griesch
Category: Tax
Satisfied Customers: 324
Experience: Tax Counsel at AIG, Inc.
Verified

You only need to pay tax when you have income. There would be no need to pay the IRS each year, unless you were renting the property and had rental income each year.

Additionally, since you realized under $250,000 of gain from the sale, the exemption amount, you would not owe any tax on the sale of the property.

Thanks for your questions.

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Tax Professional: Anne, Master Tax Preparer replied 2 years ago
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Verified

Hi

I'm Anne. I've been preparing taxes for 27 years and I have a different answer for you.

Any time you sell something, such as your land, there is a form that goes to the IRS listing the sale price only. What the IRS doesn't know is what you paid for the land, so they would have assessed taxes and penalties based on the gross sales $ amount reported to them.

So when you sell something, land, stocks, bonds,etc and the IRS receives the information on the sales price, even if the situation was as described above and you wouldn't owe taxes, you would still have been required to file the tax return, proving to the IRS that you didn't owe any tax on the sale.

However, while its true that you can claim up to $250,000 ($500.000 if filing jointly and you both meet the qualifications) on the sale of your principle residence, the sale of vacant land does not qualify for this exemption. Please see below, under heading (3) Vacant land at the following:

https://www.law.cornell.edu/cfr/text/26/1.121-1

As for taxes, you would owe 20% tax on the gain. See below:

ww.http://wmarketwatch.com/story/capital-gains-at-what-rate-will-your-long-term-sales-be-taxed-2015-02-18

Gain is the difference between the sales price and the $ amount of your cost basis in the land. It would not include the property taxes you paid every year, but it would include any improvements you made to the land, such as landscaping, fences, etc, less cost of sale.

If you have further questions, please post them here & I'll be notified.

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Anne
Anne
Anne, Master Tax Preparer
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