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Land Tax question?

Tax question: do I have to pay taxes on a public domain land purchase from the state?

  • I am settling with the state on public domain land. my question is that, i have not spoken to my brother in 20 years but we are both on the deed, will the state split up the checks or will they buy it off of us and send one check that I may never see. Also, since the state is buying the land off of me for about 10,000, will I be charged tax? or have to pay taxes on that purchase?

  • Answer:

    You must report your part of the sale on the 1040 schedule d. Your gain/loss will depend on your cost basis and what the land was used for.

Alex I at Yahoo! Answers Visit the source

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Dear Alex: Just ask the closing agent to have two checks issued. 50/50 if that is the split. Income tax will be on Sch D at the long term capital gains rate. What did you pay for the land and what expenses have you had since you've owned it. If there is a sales commission that also will be subtracted to arrive at the gain. Sale price - basis equals profit. Was the land ever involved in a business venture? This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent

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