- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
I want to know tax implications of selling vacant land purchased over 8yrs ago that will make a profit of $30k
I am married. My annual income is under $40k and my wife's income is $90k. We have one dependent. The land was purchased by me solely during my previous marriage and I married my current wife last year
Topics:
May 31, 2019
5:44 PM
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Deductions & credits
It depends. You will have a capital gain of $30K from the sale. The rate at which that capital gain will be taxed depends on your filing status. If you file jointly, you will owe capital gains tax at 15% of the gain. If you file separately, it is possible that your capital gains rate will be 0% (capital gains rate is 0% for taxable income under $37,650 if you file separately). However, there are other issues with filing separately that might make it better to file jointly regardless. For example, if you file jointly, and one of you itemizes deductions, the other one must itemize as well. The only way to figure out which strategy minimizes your overall tax bill is to create proforma tax returns both ways.
May 31, 2019
5:44 PM
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Deductions & credits
I highly suggest that you use the downloaded/CD program next year so you can do several what-if scenarios if you wish to look at multiple ways to file.
May 31, 2019
5:44 PM
- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Deductions & credits
@rbrtconnelly - My error here. I forgot that adding the capital gain to your base income if you file separately will push you into the 15% capital gains tax bracket even if you file separately. Therefore, there would be no advantage for filing separately in an attempt to avoid the gains tax.
May 31, 2019
5:44 PM