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Selling Land - Capital Gains
Old 01-10-2018, 08:56 AM   #1
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Selling Land - Capital Gains

I have read that when you sell land the real estate fee increases the cost basis when determining how much you owe in capital gains. I need to make sure this is correct since we need to keep our income low this year due to the ACA income rules.

Can anyone confirm this?
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Old 01-10-2018, 09:00 AM   #2
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pretty sure that's correct but I'll defer to the current/former CPAs on this forum

generally all the closing costs decrease the gain - agent fees, excise taxes you have to pay in WA and CO, etc

i owner-financed my last real estate sale - that will defer taxes too

have you consulted with your tax advisor?
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Old 01-10-2018, 09:36 AM   #3
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Quote:
Originally Posted by littleb View Post
I have read that when you sell land the real estate fee increases the cost basis when determining how much you owe in capital gains. I need to make sure this is correct since we need to keep our income low this year due to the ACA income rules.

Can anyone confirm this?
By real estate fee I assume that you mean the realtor's commission on the sale.

If so, then the impact is to reduce the gain.... although technically it is a selling cost and not an increase in basis.

So your capital gain would be what you sell it for, less selling costs, less basis.
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Old 01-10-2018, 09:37 AM   #4
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My accountant is out of the country.

I need to make a real estate decision now to determine capital gains for 2018 if we sell the land. This is the first year we've had coverage under the ACA with subsidies.
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Old 01-10-2018, 09:39 AM   #5
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We sold 3 empty lots to a church last year that had been in my family since 1917. Our basis was the appraised value of the property plus fees surrounding the sale--closing costs.

We didn't really make any money off the sale so capital gains was no issue. There were a couple of diseased oak trees that would have cost more than the selling price to remove.
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Old 01-10-2018, 09:42 AM   #6
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Yes, the real estate commission reduces the proceeds of sale which has the same effect as increasing the basis.
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Old 01-10-2018, 11:07 AM   #7
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Thanks everyone for the replies.
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