AboutHelen P. O`Planick, EA Expertise I am a tax professional, with experience in individual taxation. I would prefer not to answer questions about non-resident aliens or corporate taxation. Please do not ask me state related questions, unless the state is Pennsylvania. There are 42 taxing states and 42 TOTALLY different sets of state tax law.
Experience I have been preparing tax returns almost all my life. I have been in professional practice for 25 years and I am enrolled to practice before the Internal Revenue Service.
Organizations National Association of Enrolled Agents
Publications I am a prior Money Magazine Tax Test taker and have been quoted extensively in all media including monthly periodicals and books by tax authorities.
Question My wife and I bought 40 acres of land in 1999, in 2004 we put up a log building and are just now finishing the project. What is our best options to avoid unnecessary capital gains taxes? We are thinking of renting it or using it as a bed and breakfast due to the poor market right now. How would this impact our tax burden? If we do sell what should we do to limit long term gains? We would sell with 10 acres. Can capital gains tax be paid back over a period of years? Our combined income is about $60,000, about $15,000 is housing allowance. Thanks for your help.
Answer Until the election, the maximum rate for capital gains is 15%. We have no idea what will happen to the rates after the election.
If you use it for a rental or B&B, I strongly suggest seeing your tax professional to see what it will do for your personal taxes now and when you sell.
Unless you sell the property on an installment sale, taxes are due and payable in the year of sale.
You do not mention using this as a principal residence. If you do that, you only pay taxes on the portion of the profit that is over $500,000, if used as your residence for 2 out of 5 years and no business or rental use.
