I recently recieved money for the taking of part of my property by the DOT , for a road widening project . From what I've heard , I have two years to re-invest this money in more real estate of like kind . But I can't use it for anything else , otherwise , I must pay capital gains taxes on it . Is this accurate ?
2006-12-17 12:44:18 · 3 answers · asked by Lyn 2 in Business & Finance ➔ Taxes ➔ United States
If a gain results from the conversion (the eminent domain) it need not be recognized (you won't owe money) if the taxpayer (you) replaces the property within a specified period of time (according to current tax law, please check with your specific state). The replacement property MUST be similar or related in service or use to that involuntarily converted. So basically if you buy like property to replace what was taken by eminent domain you will not have any "gain" to be taxed on, but if you don't replace it with like property or don't buy property you will have a "gain" of whatever amount you got - just like it was an income and will have to pay tax on it. Hire someone to help you.
2006-12-17 14:22:51 · answer #1 · answered by Anonymous · 1⤊ 0⤋
The advice is correct.
2006-12-17 18:31:29 · answer #2 · answered by mattapan26 7 · 0⤊ 0⤋
You are correct.
2006-12-17 12:49:32 · answer #3 · answered by texascajun82 2 · 0⤊ 0⤋