Capital Gains: How Much Tax To Pay On Land Sale

Added September 25, 2006 by Ilyce R. Glink

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Summary: Whenever you sell a property you have to pay capital gains tax on the difference between what the property was worth when you got it versus how much you sell it for. An accountant or tax preparer can help you determine exactly how much capital gains tax you'll pay as well as how much state tax to pay on the land sale. Capital gains tax rates are set by Congress and change periodically.

Q: In 1990, my father gifted 65 acres of land to me. This year, I had a survey done and the land was actually just over 65 acres.

In 1990, the land was appraised at $334,000. It's worth a lot more today.

I want to sell 30 acres. On Sunday morning, I heard your radio show and you mentioned to a lady that the capital gains tax was based on your income.

Let's say I get $35,000 per acre and my average income is $35,000 per year. How or where do I find out how to figure the capital gains tax I would pay?

By the way, I mentioned your show to my son (he's a student at Georgia Tech) and he knew who you were right off. Good show. Thanks for the help.

A: If you sell 30 acres at $35,000 per acre, you will likely be paying capital gains tax at the highest rate -- 15 percent plus your state tax. Your accountant or tax preparer can run through the numbers for you.

Thanks for listening -- and thanks to your son for listening. He sounds like he has a good head on his shoulders already.

By the way, my show is podcasted at iTunes or you can listen online at the website at any time.

Sept. 25, 2006.

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