Land Sale

[MrsSippy]

What is the name of your state?

I reside in Kansas. My father passed away 10 years ago and left 3 of us children land in Arkansas. My brother and Sister quit claimed a piece of property to me. I have paid County taxes for 10 years on that piece of undeveloped property. I have been unexpectedly offered $70,000 for it. Before I start counting my chickens, I'd like to find out what I will owe the IRS for this sale. I am married. I am a homeowner, but I have never lived in the state the property sits in. I'd really appreciate it if someone could give me a little advice.

Thanks
SuzanneWhat is the name of your state?

[LdiJ]

Originally Posted by MrsSippy

What is the name of your state?

I reside in Kansas. My father passed away 10 years ago and left 3 of us children land in Arkansas. My brother and Sister quit claimed a piece of property to me. I have paid County taxes for 10 years on that piece of undeveloped property. I have been unexpectedly offered $70,000 for it. Before I start counting my chickens, I'd like to find out what I will owe the IRS for this sale. I am married. I am a homeowner, but I have never lived in the state the property sits in. I'd really appreciate it if someone could give me a little advice.

Thanks
SuzanneWhat is the name of your state?

Your basis in the land is the fair market value of the land at the time that your father died.
The portion that your siblings quit claimed to you would have that same basis, as that would be considered a gift, and with a gift you have the giver's basis. Since their basis also would have been the fair market value at the time your father died, that makes that the basis for the whole piece of land.

Your gain, is the sales price of the land, minus selling costs, minus your basis. You are taxed based on your gain. The tax rate would be either 5%, 15% or your marginal tax rate, depending on your overall tax return for the year of the sale.

[efflandt]

You also need to look into state tax requirements. I have no clue about Arkansas and Kansas income taxes. But do know that if I sell my property in WI, I would need to file a non-resident form for the WI gain only, and would get credit for that against the tax I would pay on that gain in my resident state of IL.

It might also involve filing estimated tax payments so you would not owe too much (underwithholding penalty) at tax time for state and/or federal.