Posted on November - 12 - 2011
Do I have to pay capital gains on this sale?
August 27, 8:54pm
Answer: Susan – This kind of sale usually creates a requirement to report the sale on your federal income tax return for the year of the sale. The sale would be reported on schedule D, form 1040.
You would pay capital gains tax on the sale if you sold the land for more than your cost basis at the time and any expenses related to the sale such as a sales commissions.
Since you owned the land for more than one year, any gain would be taxed at the long term capital gain tax rates. If you sold the land at a loss, the loss would be a long term capital loss.
There are many variables that can come into play depending on the exact circumstances of your ownership and sale.
Based on the information in your question, I am only able to give you a very general answer.
IRS Publication 544, Sales and Other Dispositions of Assets, Publication 550, Investment Income and Expenses and Publication 551, Basis of Assets all contain helpful information on this subject.
You may find looking at the Schedule D and instructions valuable at well.
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