"KJALarson" <KJALarson[at]comcast.net> writes:

- quote -

It appears your basis is $100,000 unless you paid the
brother something for his half. Your capital gain would be
$130,000.

Phil Marti
Clarksburg, MD

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"KJALarson" <KJALarson[at]comcast.net> wrote:

- quote -

You will be well advised to get a bit of actual professional
advice before the transaction takes place, but here's some
general info:

For income tax purposes, you will have a capital gain on the
difference between your basis and the sale price. Your
basis will be the fair market value of the land if it were
to be sold on the date the person you inherited the land
from died. So, what could it have been sold for in 1984?

Your brother's half would have the same basis as yours,
since he basically gave it to you, and his inherited value
would be the same. He is a "related party".

As far as the property tax, if the new buyer signs a "Notice
of Continuance", agreeing to keep the property
classification, then nothing bad happens. I'll bet the
buyer will want come compensation for doing that, since the
other alternative is you paying all the back taxes, plus
interest.

Also, it may be a two-year process to remove the land from
classified status. There MAY be a way out on a sale, but
that would take some research on the matter (or someone who
has dealt with the issue).

Hope that helps!
Bryan

------------------------ Bryan Kellar, EA
Oregon Tax Help, Inc. -- Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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My husband and I have 16 acres of vacant land in Deming, WA,
currently taxed at Open Space. We inherited it in 1984 (mkt
value $50,000, use value $14,000); received his brother's
half in 2001 by quit claim (mkt value$73,000, use value
$14,000). We have an offer now for the land for $230,000.
Property tax-wise it has market value of $129,000 and use
value of $15,000.

If it sold as is, am wondering about the capital gains taxes
or any inheritance taxes for which we would be liable.
Also, does anyone know if it would have to be taken out of
Open Space (use value) as there is a back tax liability of 7
years on the difference between market and use value. Would
be approx. $10,800.

Thank you in advance for any replies.

Judy Larson
kjalarson[at]comcast.net

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