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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > capital gains
Expert: Helen P. O`Planick, EA
Date: 9/29/2008
Subject: capital gains
Question
we are selling hunting property in minnesota. after figuring all the money we have put into it we have a profit, we are reinvesting into another piece of hunting property with the money from the sale too. Can we use that reinvestment so we don't have to pay as much capital gains tax? how does capital gain tax work???
Answer
It does not matter what you do with the money, you cannot exclude the gain by doing anything, buying another property included.
Your gain is figured by taking your sales price less costs of sale from your purchase price plus improvements plus cost of purchase and the difference is what you pay taxes on.
If you have owned the property for more than a year, federally your gains are long term and your top tax rate is 15%. State taxes vary. And if you don't live in MN, you will still owe taxes there as the property was there.
Helen, EA in PA
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