Re: Capital gains
[Re: 70 buzz]
#2795028
07/10/20 07:06 AM
07/10/20 07:06 AM
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Joined: Nov 2003
Posts: 10,228 Colleyville
3hundred
I Live Here
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I Live Here
Joined: Nov 2003
Posts: 10,228
Colleyville
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My brother and I are selling off a house and out buildings off the farm we inherited several years ago. We have rented the house out for years and ready to sell with a few non tillable acres. Anyone knows how the capital gains work? Thanks In Texas and I think everywhere you have to have lived in it as your primary residence within the last two years to avoid the CG's. I don't know about the rest of the country but in Texas it also counts if you've "homesteaded" it within the last two years. That's how it was explained to us when we sold our last house. On an inheritance I think your cost basis is the value at inheritance. If the value of money has decreased since then, you'll owe taxes on the current value or the real estate, I think.
'68 Fury Convertible '69 300 Convertible '15 Durango 5.7 Hemi '16 300 S Hemi
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Re: Capital gains
[Re: 70 buzz]
#2795248
07/10/20 06:22 PM
07/10/20 06:22 PM
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Joined: Jan 2003
Posts: 31,036 Oregon
AndyF
I Win
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I Win
Joined: Jan 2003
Posts: 31,036
Oregon
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My brother and I are selling off a house and out buildings off the farm we inherited several years ago. We have rented the house out for years and ready to sell with a few non tillable acres. Anyone knows how the capital gains work? Thanks Do you have records of everything? What the place was worth when you inherited it, what your expenses have been over the last few years, what the income has been, etc.? Have you been filing taxes all along and reporting the income from the rental? If you've been reporting the rental income and taking depreciation on the house then you should be in good shape. If you haven't been paying taxes on the rental income then you might be in trouble. Good luck. Find a tax accountant in town who handles small stuff like that and be prepared to drag along all of your records.
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Re: Capital gains
[Re: Redbird]
#2795869
07/12/20 04:21 PM
07/12/20 04:21 PM
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Joined: Feb 2015
Posts: 2,076 CA
crackedback
top fuel
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top fuel
Joined: Feb 2015
Posts: 2,076
CA
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A lot of issues here.
Rental property, potential depreciation recapture (which suck for those in any lower tax bracket) for one.
Was there a return done for closing the estate and transferring title? Is the property held in a trust? You will get stepped up basis on the property, but, there may be other considerations here. Too much to consider for a responsible answer.
You really have a situation that would warrant speaking with a seasoned estate/inheritance tax professional. I used to work as a CPA and would not rely on any answer on this board as substantive to your situation. Too many unknowns. JMHO
Last edited by crackedback; 07/12/20 04:26 PM.
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Re: Capital gains
[Re: crackedback]
#2796067
07/13/20 08:47 AM
07/13/20 08:47 AM
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Joined: Oct 2005
Posts: 8,872 Ontario, Canada
Stanton
Don't question me!
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Don't question me!
Joined: Oct 2005
Posts: 8,872
Ontario, Canada
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would not rely on any answer on this board as substantive to your situation.
Nailed it !!
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Re: Capital gains
[Re: 70 buzz]
#2796146
07/13/20 12:50 PM
07/13/20 12:50 PM
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Joined: Jan 2003
Posts: 6,019 Morningside
AdventurerSport
waaaay out there in left field
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waaaay out there in left field
Joined: Jan 2003
Posts: 6,019
Morningside
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Talk to a tax accountant, as stated. In Iowa (where I live), it applies to flipped real estate that you buy and re-sell within 24 months (last one I did I bought and then sold in the 25th month, therefore no capital gains) And, yes, the Capital Gains tax is only subject to the value that you gained in the two year period (so, if your Capital Gains is 30%, and you bought a home for $100,000 and sold it for $200,000, you would pay Capital Gains on $100,000 increase. That can be offset by improvements, though, so keep that in mind as well).
Good luck!
JS
76 Dodge Adventurer Sport Power Wagon W100 318, 727, NP203 Fulltime 4x4 Russet Red 06 Jeep Commander Ltd 4x4, 5.7L Hemi, QuadraDrive II 06 Chrysler 300C AWD 5.7L Hemi 10 Mopar 10 Challenger R/T, #483/500, 5.7L HEMI 10 Jeep Grand Cherokee Ltd 4x4 5.7L HEMI 11 Dodge Ram 1500 LoneStar Quad Cab, 5.7L HEMI, Fulltime 4x4, Deep Cherry Red 16 Jeep Cherokee Limited 3.2L Pentastar V6, 9 Speed Torqueflite, 4x4, Black
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Re: Capital gains
[Re: 70 buzz]
#2796147
07/13/20 12:55 PM
07/13/20 12:55 PM
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Joined: Jun 2005
Posts: 597 Maine
Pkeel
mopar
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mopar
Joined: Jun 2005
Posts: 597
Maine
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The value of the house on the date of inheritance is your "cost" for the house.
Assuming you reported the rental as income, then you would have also recorded depreciation on the rental property.
Then you can add in capital improvements if any. Items like a new bathroom, kitchen remodel or siding.
So at this point what you have is the following:
Cost (Value on day of death) $xx,xxx Less: Depreciation taken x,xxx
Add: Any capital improvements xxx
Adjusted Cost $xx,xxx
Sales price will be amount paid less related costs of sale. things like paint and cleaning company to prepare for sale.
Sales price $xx.xxx Less Agent fees paid x,xxx Fix up for sale costs x,xxx
Adjusted Sales Price $xx,xxx
Calculate capital gains.
Adjusted Sales Price Less Adjusted Cost will be the taxable amount. If negative no tax will be calculated.
So the rate is calculated based on your income.
Since you said you rented it for a couple of years it will be considered long term capital gains. I am guessing it is for a single taxpayer if married it is even more favorable.
If your income is below $40,000 tax rate is 0%. No tax to be paid Income for 40,001 to 441,450 15% Higher is 20%
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Re: Capital gains
[Re: 360view]
#2796895
07/15/20 11:40 AM
07/15/20 11:40 AM
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Joined: Feb 2014
Posts: 1,707 central il.
second 70
top fuel
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top fuel
Joined: Feb 2014
Posts: 1,707
central il.
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I was surprised this afternoon to find that for single filers for 2019 the first $39,375 of long term capital gains is taxed at zero.
So much was made of putting a $10,000 maximum Federal deduction for State and Local Taxes ( SALT) that the good news of being able to pay zero tax on say, buying old cars or parts, holding them more than one year, and hopefully selling them for a capital gains profit with zero tax due got lost in the “media noise.”
Before this afternoon, when I thought of avoiding Federal taxes I thought of municipal bonds.
It makes more sense now to putting in any free hours and energy into figuring out how to make up to a $40,000 one year or more Capital Gain.
Wrong Fake News that's if your total income total is under $39,375. over it's 15% up to $434,550 and 20% over that amount.
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Re: Capital gains
[Re: 70 buzz]
#2797309
07/16/20 09:55 AM
07/16/20 09:55 AM
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Joined: Jan 2003
Posts: 4,225 Bloomington, IN
HoosierTA
master
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master
Joined: Jan 2003
Posts: 4,225
Bloomington, IN
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My wife just finished out taxes, and we sold a property we had for nearly 30 years. I also bought a tractor last year, so it really helped offset the hit. Nothing like being DINK at an higher tax bracket- and hearing parents whine about some bump in expense they are having to pay for their kids school expense. Dude! I am paying to educate your kid. Go a year and not take the dependent deduction, your getting a bargain. Its actually a welfare program.
'70 Challenger R/T 383 '16 Hemi Durango SSV (work vehicle) '15 Ram Police SSV
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