Capital Gains on Inherited land without a house

Forum|Forum|4 years ago
December 11, 2021
5 replies
43 views

My wife inherited 80 acres of farm land 20 years ago. She wants to sell it for 400k . Does the sale get treated like nomal captial gains. She doesnt have any income. Should we file "Married filing separately". My Income in 2021 is 240k. 2022 it will be 150k. which year should we take the capital gains and file separately?

Mike9241

Level 15

My wife inherited 80 acres of farm land 20 years ago. She wants to sell it for 400k . Does the sale get treated like nomal captial gains.

yes her capital gain will be the $400K less selling expenses less the date of death fair market value.

She doesnt have any income. Should we file "Married filing separately". My Income in 2021 is 240k. 2022 it will be 150k. which year should we take the capital gains and file separately?

a great question, we can't answer. we don't know enough about your tax situation to give you a recommendation but generally filing jointly will be better. get the desktop software that will allow you to do separate computations of MFS vs joint filing. the other issue is no one knows what the tax laws will be in 2022. an economic issue is how will the sales price be affected by various events such the pandemic, inflation

Mike9241

AngelchaseAuthor

Level 2

If the sale is treated like normal capital gains, if she files "Married Filing Separately", and her income is 0, then is it true that she should not have to pay any capital gains taxes?

Anonymous_

Level 15

Read through this section --> https://www.irs.gov/publications/p504#en_US_2020_publink1000175841

Note that if you are a resident of a community property state, you need to take precautions with respect to commingling the property and proceeds (i.e., the inheritance and proceeds from the sale must be held as separate property).