How much capital gains tax will I need to pay if I sell my land?

Question

Land in Vermont, asking $60,000 for 35 acres, have buyer

Answer 1

The capital gains tax will depend on your basis, which usually means how much you paid when you bought the land. Your gain will be the sales price less that basis.

For the federal tax, capital gains are taxed at 5% or 15% depending on how much other income you have. Vermont taxes range from 3.6% to 9.5%, and I don't know whether they have tax breaks for capital gains.

Answer 2

If you owned the land for more than one year, or if you inherited the land, your capital gains will be long-term...otherwise, it will be short term.

To calculate the gain, you take the selling price minus the purchase price, minus any fees or costs to purchase and to sell the land, minus any improvements you made to the land (grading, etc.). If you inherited the land, your "purchase price" is the fair market value when the former owner died (or 6 months after they died if they used the alternate valuation date). If someone gave you the land, your "purchase price" is whatever the giver's basis was.

For federal tax purposes, if the gain is long term, it is taxed at 15% if you are in the 25% or higher income bracket. If you are in the 10% or 15% bracket, the gain is taxed at 5%. If it is short term gain, it is simply added to your income and taxed at your marginal tax rate just as if it were interest.

I don't know Vermont-specific tax details.

Good luck!

Answer 3

Unimproved land is considered an investment capital and taxable at your adjusted gross income tax rate.

See an tax professional..

Good luck