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Randy19
Level 1

Gifted land

In 2007 my mother gave me 10 acres that she and my dad purchased in 1965, in Arkansas. My mother passed away in 2013. I sold the 10 acres on January 27, 2020. The land is undeveloped. Price of land from 2007 to present day hasn't changed due to location and town it is located. (This is information I received when calling a real estate agent in the town land is located.) My questions are how do I declare this on 2020 taxes and how to figure any taxes I will have to pay. Also, will this add to my gross income in 2020, putting me in a much higher tax bracket.

3 Replies
DanaB27
Expert Alumni

Gifted land

You will report the sale of the land on Schedule D and Form 8949 on your tax return in 2020. Your cost basis is the price your mother paid for the land. Your gain will be the sales price- sales expenses- cost basis.

Capital Gain Tax Rates

The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than $78,750.

A capital gain rate of 15% applies if your taxable income is $78,750 or more but less than $434,550 for single; $488,850 for married filing jointly or qualifying widow(er); $461,700 for head of household, or $244,425 for married filing separately.

However, a net capital gain tax rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate. (IRS Capital Tax Rates)

 

Instructions on how to enter the sale in TurboTax next year:

  1. Login to your TurboTax Account 
  2. Click "Work on other tax breaks"
  3. Click "Federal" from the left side of your screen
  4. Scroll down to "Investment Income" and select "Stocks, Mutual Funds, Bonds, Other".
  5. Respond "yes" to "Did you sell any investments?
  6. Continue, until you'll be asked "Did you get a 1099-B or brokerage statement?" and  answer "no."  
  7. Select "Land" when shown a list of various investment sales
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Randy19
Level 1

Gifted land

I contacted the tax assessor office where land is located, they informed me they do not have records as far as 1965. However, in 2005 a different plot of the land was sold. This plot was part of original purchased land in 1965.

 

So, where will I get my cost basis for the sale of land I recently sold? From comparison of land sold in 2005?

AmyC
Expert Alumni

Gifted land

Court records from purchase of property may show the value. Neighbors may be helpful. All you can do is your best. If the IRS decides to audit you, you will have to show how you got your basis.

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