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rmdokter
New Member

Selling acreage, buyer wants us to set values on land and home.He wants to sell land after closing to avoid capital gains.Am I subject to capital gains?Owned home 6 years

We did not have set amounts for the acreage when we purchased it, but I'm afraid we'll be subject to capital gains if we set amounts for the home and land.

The County Assessor has values set for home, land, and buildings.
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4 Replies
Hal_Al
Level 15

Selling acreage, buyer wants us to set values on land and home.He wants to sell land after closing to avoid capital gains.Am I subject to capital gains?Owned home 6 years

You cannot "set" values for the purpose of avoiding tax. The values are what a reasonable buyer and seller would agree to without a tax avoidance motive. Without a formal appraisal, the ratio of home land and buildings provided by the tax assessor would be reasonable.

Selling acreage, buyer wants us to set values on land and home.He wants to sell land after closing to avoid capital gains.Am I subject to capital gains?Owned home 6 years

Also, your capital gains tax will depend on what you are selling.  If you are selling your personal home, which came with acreage but you lived there as your home, you can exclude a portion of the gains from tax.  If this was a farm or something else, it's more complicated.

Selling acreage, buyer wants us to set values on land and home.He wants to sell land after closing to avoid capital gains.Am I subject to capital gains?Owned home 6 years

"Real property" is land, plus anything that happens to be attached to it.  You can't sell or buy land without selling the structures attached, and you can't sell the structures without the land.  (The assessor may provide separate values, but you can't sell them separately.)

If you want to sell 40 acres with a farmhouse and barn, you could divide them into two lots, and sell 39 acres separately from 1 acre with the house and barn on it. but doing that legally will likely require a number of expensive fees.

You should have an attorney to assist you any time you sell land anyway, and here it sounds like to may need an attorney to prevent the buyer from pulling a fast one.  At least it deflects the blame "sorry, my attorney won't let you do that."

If I'm wrong and the buyer's plan is allowed, an attorney would confirm that too.

Selling acreage, buyer wants us to set values on land and home.He wants to sell land after closing to avoid capital gains.Am I subject to capital gains?Owned home 6 years

Maybe do an Installment Sale instead?
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