title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Wednesday, August 11, 2004
 
Impossible Goal?
I'm not sure why this person thought there was a way to avoid taxes on the sale of some highly appreciated real estate without doing a 1031 exchange; but I guess it doesn't hurt to ask.

I Bought a piece of land I thought we would build on. But plans have changed. I can now sell it for 2ce as much as I paid for it just a few months ago. How can I avoid capital gains and not do a 1031? Or if I have to pay capital gains what is the %?

thank you,


My Reply:

If you don't want to do a 1031 exchange, you will be forced to report the profit, which will be taxed at your normal income tax rates since you have owned the property for less than 12 months. Your actual tax rates (Federal + State) will obviously depend on your other levels of income.

You can spread the tax hit out over a number of years if you carry back part or all of the sales price. You can then use the installment method to report the gain each year as you receive the principal payments.

Your personal tax advisor should be able to help you with this. It's very basic taxation law.

Good luck.

Kerry Kerstetter


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- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 8/11/2004 05:26:00 PM Send this post:

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