Taxes on investment land property

#3 06-02-2006, 04:20 AM

"AustinScoobee" <gordnally[at]hotmail.com> wrote

- quote -

> We have a piece of land we bought 5 years ago, which we may
> be forced to sell for cashflow reasons. We wanted to know
> how it will be taxed.

As capital gains, at the capital gains rates in effect in
the year sold.

- quote -

> Is it taxed based on the profit, calculated from the original
> purchase price against our sell price,

Yes, plus certain closing costs, and any improvements made
over the years.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#2 05-26-2006, 05:16 PM

Gil Faver wrote:

- quote -

> and if it is not deductble on Schedule A? Isn't it carried
> forward to be used to offset gain upon sale?

That depends on why it's not deductible. Investment interest
is deductible to the extent of net investment income. Excess
investment interest is carried forward.

On the other hand, if there is net investment income, but the
taxpayer doesn't itemize (because the standard deduction is
larger), then investment interest equal to that net investment
income is lost.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#1 05-26-2006, 04:42 AM

"Bill Brown" <brownwp[at]longwood.edu> wrote:
- quote -

> AustinScoobee wrote:

> > We have a piece of land we bought 5 years ago, which we may
> > be forced to sell for cashflow reasons. We wanted to know
> > how it will be taxed. Is it taxed based on the profit,
> > calculated from the original purchase price against our sell
> > price,

> Yes.

> > or is it as sort of "cost basis" where we use the
> > actual money spent (downpayment, and all the monthly
> > payments) against the sell price..

> There is no such method of calculating basis. Interest on
> the mortgage could be deductible on Schedule A under certain
> circumstances.

and if it is not deductble on Schedule A? Isn't it carried
forward to be used to offset gain upon sale?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

05-25-2006, 12:53 AM

AustinScoobee wrote:

- quote -

> We have a piece of land we bought 5 years ago, which we may
> be forced to sell for cashflow reasons. We wanted to know
> how it will be taxed. Is it taxed based on the profit,
> calculated from the original purchase price against our sell
> price,

Yes.

- quote -

> or is it as sort of "cost basis" where we use the
> actual money spent (downpayment, and all the monthly
> payments) against the sell price..

There is no such method of calculating basis. Interest on
the mortgage could be deductible on Schedule A under certain
circumstances.

- quote -

> Depending on the eventual sell price, we are very close to
> just dead even, against what we think we can get as far as
> total cost to us, yet if we are taxed based on simply the
> original price vs sell price, we will show a gain of about
> 50k..

And your additional federal income tax will be about $7,500.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#-1 05-24-2006, 04:37 PM

We have a piece of land we bought 5 years ago, which we may
be forced to sell for cashflow reasons. We wanted to know
how it will be taxed. Is it taxed based on the profit,
calculated from the original purchase price against our sell
price, or is it as sort of "cost basis" where we use the
actual money spent (downpayment, and all the monthly
payments) against the sell price..

Depending on the eventual sell price, we are very close to
just dead even, against what we think we can get as far as
total cost to us, yet if we are taxed based on simply the
original price vs sell price, we will show a gain of about
50k..

Any help here much appreciated.

G

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

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