Sold land after divorce. Profited 200K from sell. Will capitol gain tax will be applied? Only investment property that we owned. I have purchased a new home this year

[nicolas-mcjimsey]

I finalized my divorce in April this year.  We had to sell the land in which we were planning on building on and had already cleared out a spot for a future build.  We ended up profiting about 200K from the sell.  I got about 90K of that profit.  I'm wondering if the capitol gain tax will be applied to this.  It was the only investment property that we owned.  I have purchased a new home this year as well and used the profit for the down payment.  

[rjs]

Yes, you will pay tax on your capital gain from selling the land. It doesn't matter what you used the money for.

There used to be a rule that you could defer (not eliminate) the tax on the gain from selling your primary home if you used the money to buy a new primary home. That rule was removed from the tax law in 1997. And anyway, it only applied to selling the home you were living in, not selling land with no building on it.

[Opus 17]

"We sold land"

If you and your spouse bought the property together, you each share half the cost basis.  The cost basis is the price you originally paid, plus the price of any permanent improvements you made to the land.  You can also include certain legal costs of purchasing the land—Abstract fees, Legal fees (including fees for the title search and preparing the sales contract and deed), recording fees, survey fees, transfer or stamp taxes, and owner's title insurance (if any). You can include "capitalized carrying costs" in your basis (if you don't know what this is, don't worry about it, you don't have any.) You can also deduct these fees from the sales price as part of the cost of selling, if you paid them as part of the selling transaction.   You can also deduct a real estate commission, if you paid one.  The more of these fees you can prove, the more you can lower your gain.  

Your capital gain is the adjusted selling price minus the adjusted cost basis.  If you were equal owners, then each of you will report half the cost basis and half the selling price on your tax return, and pay tax on half the gain.  The calculated gain may not match the actual proceeds, but you are taxed on the calculated gain.  

If you owned the property more than 1 year, this is a long term gain that is taxed at 15% for most people, but it could be 0% (if you are in the 12% or lower regular tax bracket) or could be 20% (if you are a really high tax bracket).