turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

If filing HOH w/ income $0-$52750 (I'm in this range), the 2019 long-term cap gains tax rate is 0%, why would I be assessed a 20% tax on the sale of inherited land?

 
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
SusanY1
Expert Alumni

If filing HOH w/ income $0-$52750 (I'm in this range), the 2019 long-term cap gains tax rate is 0%, why would I be assessed a 20% tax on the sale of inherited land?

How much was the gain?  The income on the gain is added to your overall AGI to determine your income bracket for capital gains.  That income does not affect the tax rate on your ordinary income, but it can raise your tax bracket for purposes of determining your effective tax rate on capital gains.   

 

For example, if the gain on the property is $500,000 then your income for determining the capital gains tax would be in the $500,000+ rate for determining the capital gains tax rate only, but your income for ordinary income would still be at the rate for 0-$52,750.

 

When determining the gain on your sale of the inherited asset, do remember that for many assets the basis of the property is "stepped-up" at death - meaning that you do not necessarily inherit the original owner's basis.  This will sometimes lower the amount of gain that you are required to report on the sale.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies

If filing HOH w/ income $0-$52750 (I'm in this range), the 2019 long-term cap gains tax rate is 0%, why would I be assessed a 20% tax on the sale of inherited land?

you will have to provide more details.  How much was the profit on the land? 

 

even if your income was $50,000, if your capital gains is $500,000, then there is long term tax at 20%

the capital gains rate doesn't stay at zero just because your earned income is low. 

 

 

SusanY1
Expert Alumni

If filing HOH w/ income $0-$52750 (I'm in this range), the 2019 long-term cap gains tax rate is 0%, why would I be assessed a 20% tax on the sale of inherited land?

How much was the gain?  The income on the gain is added to your overall AGI to determine your income bracket for capital gains.  That income does not affect the tax rate on your ordinary income, but it can raise your tax bracket for purposes of determining your effective tax rate on capital gains.   

 

For example, if the gain on the property is $500,000 then your income for determining the capital gains tax would be in the $500,000+ rate for determining the capital gains tax rate only, but your income for ordinary income would still be at the rate for 0-$52,750.

 

When determining the gain on your sale of the inherited asset, do remember that for many assets the basis of the property is "stepped-up" at death - meaning that you do not necessarily inherit the original owner's basis.  This will sometimes lower the amount of gain that you are required to report on the sale.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Unlock tailored help options in your account.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question