Selling second home and a separate property for $50,000. How will this affect my 2017 taxes?

[jbprivett3]

I bought the second home from my mother as a personal sell from her for $10,000. It cost me $8,200 dollars to provide insurance for the home. The acreage I am selling is separate from this property but again to the same person my brother. I am planning to do this as a single sale for $50,000 total. 

Is there a need to break up the two sells separately? If so I would use $20,000 for the home place and $30,000 for the separate acreage. There is a deed for each of these properties. 

How will this affect my taxes for 2017? Would it be wiser to accept half of the payment this year and the other half next year on 2018 taxes? 

[DanielV01 · Accepted solution]

It depends on how this will affect your 2017 taxes.  While you can prepare for a possible impact through estimated tax payments, you also seem to be interested on what that might be.  You are dealing with capital gains.  When you hold an asset (which the house and property are both considered assets), the amount of money you make off of reselling them are considered capital gains.  If you have held each for 1 year and 1 day, they are long-term capital gains, which have a more favorable treatment than short-term capital gains.  Here is an FAQ that provides more information:  https://ttlc.intuit.com/replies/3301738

You can treat the two sales independently.  For the house you have a basis (what you invested in the house) of 18,200.  Since you are selling for 20,000, you have a gain of 1800.  If it is long-term, it will be taxed at zero federal (but likely the going rate on your state return) if you are moderate income.  The land would be sold for 30,000, but you have to determine what the original land price was.  (Land does not fluctuate too greatly).

It's possible that this will not have too great of an impact on your return, but you will definitely wish to keep track of it and report it next year.  And if making estimated payments will help you to be prepared, by all means do so.

[IreneS]

UPDATED FOR TAX YEAR 2019

TurboTax can assist you in calculating what your 2020 taxes will be, taking the two sales into consideration.

If you have owned the two properties for less than a year, your gain would be considered short-term and taxed at a higher rate than a long-term gain.

To calculate estimated taxes for 2020, please follow these steps:

1.      Click on Federal Taxes > Other Tax Situations

2.      On the screen, Let's check for any uncommon tax situations, in the Other Tax Forms section, click on the Start/Revisit box next to Form W-4 and Estimated Taxes.

3.      On the screen Adjust How Much Tax You Pay click the No box.  [This is for withholding from a paycheck.]

4.      On the next screen, Estimated Taxes for 2020, click the Prepare Now box.  

5.      On the Review Your Estimates for 2020 screen TurboTax will display 2020 quarterly estimates based on your 2019 income.  If you think your 2020 financial picture will differ, click on the Yes box to adjust your income or deductions.  

6.      Continue through the screens, entering the requested information.  TurboTax will then calculate your quarterly estimated payments for 2020.

[Edited | 4/15/2020 | 11:57am PDT]