How much income tax would you have to pay on a sale of land for $90,000?

Question

The land is owned by a family of 3 in the state of Nebraska. They are splitting the land 3 ways. If each of them got $90,000 how much would each of them have to pay for income tax on that 90 thousand dollar land sale? A fairly general number would be ok...I'm just trying to figure out if it would be more like 2 or 3 thousand dollars...or if it would be more like 10 or 15 thousand dollars. Thanks in advance.

ok so im adding a couple more details to help out...The land was aquired about 7 or 8 years ago by means of inheritance. The land was appraised at 160,000 dollars in 2001, and now appraised around 300,000 this year.

Answer 1

I am assuming that the 2001 appraisal was done to determine the value at the date of death. If that is the case, then the basis in the property is $160,000 or about $53,000 each. If the net proceeds are $90,000, the long-term capital gain would be $37,000 each. Federal capital gains tax is 15% maximum or about $5,500 each. I don't know what the Nebraska tax on the $37,000 gain would be.

Jim Kirby, CPA

Answer 2

You need to deduct what was paid for the land. You would only be taxed on the difference between the cost + improvements and the sales price. If the land has been owned for a few years, estimate that the tax would be no more than 20% of the profit.

Answer 3

OK, first of all, if it was inherited the basis reset then to its value then, so the total gain is $300k minus its value when it was inherited, minus any expenses like selling commissions, divided by the three people. As a capital gain it would be taxed at 5% if their bracket is 15% or less, otherwise 15%. So federal income tax for each of the three people would likely be under $10,000, maybe much less.

Answer 4

The cost or value of the land will be the appraised value at the time of the death of the person you inherited from. The proceeds exceeding that value will be taxed as a capital gain.

Answer 5

The maximum federal LTCG rate is 15%, but if there is a huge spike in income, it can trigger AMT, so using 17-20% is a more useful pct for estimating the tax impact.

How was the land acquired? You need to know your tax basis to figure out the gain.

Answer 6

Your will have to figure your individual cost basis for the land (the value at which you bought or acquired it). If the sale is for more than that, then the difference (profit, if you will) is a capital gain that will be taxed at the appropriate capital gain rate. So the answer is "it depends."

Answer 7

your looking at tax bill of $14,000+/- if your in the 25%+ tax bracket