Explaination: We are selling our home and moving to an area where we can not afford a house (Northern California) what we do want to do is buy land somewhere else and keep it for a few years and either build on it or sell.
My real question:If I use the money I make from my home selling to buy land is the taxes different or do I still get the same tax benefits I got being a home owner? Is land vs. home taxed diferent?
2006-10-20 17:27:17 · 4 answers · asked by MaryJaneD 5 in Business & Finance ➔ Renting & Real Estate
You are allowed a tax deduction for mortgage interest and property taxes for a residence. Raw land is not a residence, so there is no deduction allowed for it. However, if you put up a trailer that has normal living accomodations you may be able to get around that.
Should you sell the land without putting up a home and living in it for at least 2 of the 5 years immediately prior to the sale, you will not be able to claim the tax exemption on the gain on sale of a primary residence.
2006-10-20 17:33:38 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 1⤋
You will have a differnt sort of tax write off. Since you are not "living" on the land, you can not claim the interest as mortgage interest on a schedule A (Fed Return). It might be wiser to buy a home somewhere, and rent it out so you can have the income / interest to write off on your taxes.
Additionally, if you have not owned your current property that you are living in now for 2 years, you are not exemptfor the capital gains on the sale (If it is over 2 years, and you have lived in it at least 2 of the past 5 years you are fine). Investment property is basically what you are looking at, so it gets reported as such.
Good luck, but consult YOUR tax accountant for more specifics to your needs.
2006-10-21 00:36:45 · answer #2 · answered by Jen 5 · 0⤊ 0⤋
yes buying land and selling home varies in taxes so it is better to keep the house and be as a owner so that u get more benefits than owning the land
2006-10-21 00:38:47 · answer #3 · answered by sri k 1 · 0⤊ 0⤋
Purchasing land is a real estate option which is good. You can control undervalued property without the burdens of ownership. Go to your county clerks office and ask because the laws are different in california. I'm pretty sure that tax is the same whether land or property. land is property.
2006-10-21 00:43:06 · answer #4 · answered by miss tique 3 · 0⤊ 0⤋