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 » From: Cincinnati, OH Dear TaxMama: Before my grandfather died he gave me 25 acres of land as a gift. I have recently sold the land and am trying to figure out how much tax I owe. Can you help me figure this out? I also need to know if I am bumped into the higher capital gains tax bracket because of the sale of the land or if that is determined by my income. Please help. Sincerely, Craig Dear Craig, That's really too bad. That means you have to track down HIS original cost for that land. Or the cost to whoever he got it from. That can be quite a task. If he gave it to you shortly before he died, you may be able to use the fair market value (FMV) at date of death. I must admit that I don't remember the time frame, if it is three years before death or how long. You'll have to find that out by checking with an estate attorney. If you are able to use the FMV at date of death, get something tangible, in writing, to prove the value. This could be so important to you, since, most likely, the FMV of the property was much closer to your selling price than his original purchase price was. In other words, if you can use the date of death FMV, you may not have much gain at all. If you can't, you have a long research project ahead of you. And, yes, your tax bracket may change because of the additional income. Although, the sale of the land will be taxed at the capital gains rates that apply to the situation. Best wishes, Eva Rosenberg Your TaxMama  |
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