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#7239940 - 07/30/18 01:52 PM Selling the ranch - Taxes?
JohnRussell Offline
Pro Tracker

Registered: 05/04/07
Posts: 1460
Loc: Cedar Creek, TX
Yes, you read that correctly. We have decided to sell our ranch south of Rocksprings.

We did not come upon this decision lightly, we simply do not get out there enough and, frankly, tired of dealing with 2 WLM reports every year. The ranch is awesome, the PoA is actually leaving us alone AND being nice to us, and I love being out there, but I went in December, then again a week ago.

I have friends that go and keep it clean and running etc.. but paying about 1400 a month for insurance, electricity, the loan, phone.. etc.. for others to use it.. just is not worth the hassle.

Now, we MAY defer the proceeds and roll it into a new place closer... or we may pay the taxes and simply wait till we locate what/anything we may want more.

So, curious.. and I think it is based on our income...

If we have had it like 8 years and made a lot of improvements, it is long term gains and taxes less than if we owned it under a year?

Not sure we could count it as a loss if it appreciated heh...

Just curious if anyone here knows.

Mike/Pitch, there will always be leases wink

Russ
_________________________
Hunting is easy..it's getting permission from your wife that is tough.

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#7240005 - 07/30/18 02:53 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
Daseke12 Offline
Light Foot

Registered: 07/09/18
Posts: 10
Loc: Dallas, Texas
That is correct if you have owned it longer than a year than it is long term capital gains. If you've held it shorter than a year it would be short term capital gains. In terms of the income based perspective it are you talking about the personal residence exemption?
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Matthew Daseke
Real Estate Agent
Ranch and Land Division
Dave Perry-Miller Real Estate,
An Ebby Halliday Company
www.countryconnection.com
matthew@countryconnection.com


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#7240017 - 07/30/18 03:05 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
JohnRussell Offline
Pro Tracker

Registered: 05/04/07
Posts: 1460
Loc: Cedar Creek, TX
No, this is not a personal residence, so could not claim that. I think I am looking at about 28% taxes on it
_________________________
Hunting is easy..it's getting permission from your wife that is tough.

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#7240028 - 07/30/18 03:15 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
Daseke12 Offline
Light Foot

Registered: 07/09/18
Posts: 10
Loc: Dallas, Texas
Best example I can provide you is that if you have a 500,000 property and put 250,000 in improvements and then sell the property for 1,000,000 then you will be paying capital gains on that final 250,000. The percentage varies though. Don't know if I helped much.
_________________________
Matthew Daseke
Real Estate Agent
Ranch and Land Division
Dave Perry-Miller Real Estate,
An Ebby Halliday Company
www.countryconnection.com
matthew@countryconnection.com


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#7240053 - 07/30/18 03:46 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
Txduckman Online   content
THF Celebrity

Registered: 08/30/04
Posts: 14282
Loc: Big D
Originally Posted By: JohnRussell
No, this is not a personal residence, so could not claim that. I think I am looking at about 28% taxes on it


Long term capital gain is 15%. 20% if in the highest bracket. Take total purchase price plus improvements for basis.

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#7240381 - 07/30/18 09:41 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
TakeMeLord Offline
Bird Dog

Registered: 10/29/11
Posts: 299
There are different tax rates for different individuals. I am assuming the real property is owned by an individual, not held in a trust nor an LLC nor a partnership, etc.

The tax bracket is determined by the type of asset, the length of ownership, and the effective tax rate of the owner/seller. Drew Johnson in my office can answer all your questions. He has an LLM in Taxation from SMU Law School. 817-877-5995

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#7240409 - 07/30/18 10:13 PM Re: Selling the ranch - Taxes? [Re: JohnRussell]
stxranchman Offline
Obie Juan Kenobi

Registered: 08/04/10
Posts: 53437
Is it possible to do a 1031 on just the capital gains portion of the sale?
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#7240438 - 07/30/18 11:24 PM Re: Selling the ranch - Taxes? [Re: stxranchman]
Txduckman Online   content
THF Celebrity

Registered: 08/30/04
Posts: 14282
Loc: Big D
Originally Posted By: stxranchman
Is it possible to do a 1031 on just the capital gains portion of the sale?


Nope. 100% of net proceeds of the sale must be 100% invested in new property and the new property must be equal or greater value than the previous (could spread over several as well). You have 45 days to find a new property and 180 days to close. You may not receive a single dollar either as it must be in escrow to pay the liabilties and to move to new property. You can imagine why there... And you need cash or financing for the new property since it must be equal or greater value than what you just sold.

As usual contact your real estate and tax professional. I do have an accounting degree though but not a CPA. Not all CPAs have a clue about personal income tax. This information is freely available as this is very common. Turbo Tax can be used for the capital gains taxes whatever you decide. It's not hard. The IRS is jiat there to keep you honest.

You can do like my buddy. Take several mil in proceeds, screw the 1031 scenario, pay taxes and invest in stocks and double money in 3 years. Buy new property for his company and start over. Lucky sob... Otherwise he was forced to overpay for property he didn't want. His choice and it was the best in his case. Sounds like same for you possibly.

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#7240607 - 07/31/18 08:37 AM Re: Selling the ranch - Taxes? [Re: JohnRussell]
Pitchfork Predator Online   content
THF Celebrity

Registered: 01/25/13
Posts: 14823
Loc: Murphy, TX Dickens county
Originally Posted By: JohnRussell
Yes, you read that correctly. We have decided to sell our ranch south of Rocksprings.

We did not come upon this decision lightly, we simply do not get out there enough and, frankly, tired of dealing with 2 WLM reports every year. The ranch is awesome, the PoA is actually leaving us alone AND being nice to us, and I love being out there, but I went in December, then again a week ago.

I have friends that go and keep it clean and running etc.. but paying about 1400 a month for insurance, electricity, the loan, phone.. etc.. for others to use it.. just is not worth the hassle.

Now, we MAY defer the proceeds and roll it into a new place closer... or we may pay the taxes and simply wait till we locate what/anything we may want more.

So, curious.. and I think it is based on our income...

If we have had it like 8 years and made a lot of improvements, it is long term gains and taxes less than if we owned it under a year?

Not sure we could count it as a loss if it appreciated heh...

Just curious if anyone here knows.

Mike/Pitch, there will always be leases wink

Russ


Yes there will be my friend. Or maybe we should all start planning some out of state adventure?

Long term capital gain will be the effective tax rate.
_________________________
Marc C. Helfrich
Retirement Planner

www.insured-wealth.com
469-323-8920

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#7240660 - 07/31/18 09:26 AM Re: Selling the ranch - Taxes? [Re: Txduckman]
Creekrunner Offline
THF Celebrity

Registered: 10/19/12
Posts: 11015
Loc: Bexar/Gillespie, hunt Terrell
Originally Posted By: Txduckman
... pay taxes and invest in stocks and double money in 3 years. Buy new property for his company and start over.


"'Easy as fallin' off a log." nidea
_________________________
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#7240820 - 07/31/18 11:48 AM Re: Selling the ranch - Taxes? [Re: Creekrunner]
Txduckman Online   content
THF Celebrity

Registered: 08/30/04
Posts: 14282
Loc: Big D
Originally Posted By: Creekrunner
Originally Posted By: Txduckman
... pay taxes and invest in stocks and double money in 3 years. Buy new property for his company and start over.


"'Easy as fallin' off a log." nidea


Or walking and chewing gum... Lucky sob with a little bit (or a lot!) of calculated risk.

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#7240823 - 07/31/18 11:56 AM Re: Selling the ranch - Taxes? [Re: Pitchfork Predator]
Txduckman Online   content
THF Celebrity

Registered: 08/30/04
Posts: 14282
Loc: Big D
Originally Posted By: Pitchfork Predator
Originally Posted By: JohnRussell
Yes, you read that correctly. We have decided to sell our ranch south of Rocksprings.

We did not come upon this decision lightly, we simply do not get out there enough and, frankly, tired of dealing with 2 WLM reports every year. The ranch is awesome, the PoA is actually leaving us alone AND being nice to us, and I love being out there, but I went in December, then again a week ago.

I have friends that go and keep it clean and running etc.. but paying about 1400 a month for insurance, electricity, the loan, phone.. etc.. for others to use it.. just is not worth the hassle.

Now, we MAY defer the proceeds and roll it into a new place closer... or we may pay the taxes and simply wait till we locate what/anything we may want more.

So, curious.. and I think it is based on our income...

If we have had it like 8 years and made a lot of improvements, it is long term gains and taxes less than if we owned it under a year?

Not sure we could count it as a loss if it appreciated heh...

Just curious if anyone here knows.

Mike/Pitch, there will always be leases wink

Russ


Yes there will be my friend. Or maybe we should all start planning some out of state adventure?

Long term capital gain will be the effective tax rate.


Long term capital gains are not at the effective tax rate. Why would you say that? Your effective tax rate determines your long term capital gain rate. Based on your effective rate, your capital gains rate will be 0%, 15%, or 20%. 0% is for the lowest brackets and 20% is for the highest bracket. Most of us would be subject to 15%. Look at the IRS chart.

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#7241042 - 07/31/18 03:14 PM Re: Selling the ranch - Taxes? [Re: Txduckman]
Pitchfork Predator Online   content
THF Celebrity

Registered: 01/25/13
Posts: 14823
Loc: Murphy, TX Dickens county
Originally Posted By: Txduckman
Originally Posted By: Pitchfork Predator
Originally Posted By: JohnRussell
Yes, you read that correctly. We have decided to sell our ranch south of Rocksprings.

We did not come upon this decision lightly, we simply do not get out there enough and, frankly, tired of dealing with 2 WLM reports every year. The ranch is awesome, the PoA is actually leaving us alone AND being nice to us, and I love being out there, but I went in December, then again a week ago.

I have friends that go and keep it clean and running etc.. but paying about 1400 a month for insurance, electricity, the loan, phone.. etc.. for others to use it.. just is not worth the hassle.

Now, we MAY defer the proceeds and roll it into a new place closer... or we may pay the taxes and simply wait till we locate what/anything we may want more.

So, curious.. and I think it is based on our income...

If we have had it like 8 years and made a lot of improvements, it is long term gains and taxes less than if we owned it under a year?

Not sure we could count it as a loss if it appreciated heh...

Just curious if anyone here knows.

Mike/Pitch, there will always be leases wink

Russ


Yes there will be my friend. Or maybe we should all start planning some out of state adventure?

Long term capital gain will be the effective tax rate.


Long term capital gains are not at the effective tax rate. Why would you say that? Your effective tax rate determines your long term capital gain rate. Based on your effective rate, your capital gains rate will be 0%, 15%, or 20%. 0% is for the lowest brackets and 20% is for the highest bracket. Most of us would be subject to 15%. Look at the IRS chart.


I answered the question correctly, sorry you donít understand why.
_________________________
Marc C. Helfrich
Retirement Planner

www.insured-wealth.com
469-323-8920

Top
#7241053 - 07/31/18 03:22 PM Re: Selling the ranch - Taxes? [Re: Pitchfork Predator]
Txduckman Online   content
THF Celebrity

Registered: 08/30/04
Posts: 14282
Loc: Big D
Originally Posted By: Pitchfork Predator
Originally Posted By: Txduckman
Originally Posted By: Pitchfork Predator
Originally Posted By: JohnRussell
Yes, you read that correctly. We have decided to sell our ranch south of Rocksprings.

We did not come upon this decision lightly, we simply do not get out there enough and, frankly, tired of dealing with 2 WLM reports every year. The ranch is awesome, the PoA is actually leaving us alone AND being nice to us, and I love being out there, but I went in December, then again a week ago.

I have friends that go and keep it clean and running etc.. but paying about 1400 a month for insurance, electricity, the loan, phone.. etc.. for others to use it.. just is not worth the hassle.

Now, we MAY defer the proceeds and roll it into a new place closer... or we may pay the taxes and simply wait till we locate what/anything we may want more.

So, curious.. and I think it is based on our income...

If we have had it like 8 years and made a lot of improvements, it is long term gains and taxes less than if we owned it under a year?

Not sure we could count it as a loss if it appreciated heh...

Just curious if anyone here knows.

Mike/Pitch, there will always be leases wink

Russ


Yes there will be my friend. Or maybe we should all start planning some out of state adventure?

Long term capital gain will be the effective tax rate.


Long term capital gains are not at the effective tax rate. Why would you say that? Your effective tax rate determines your long term capital gain rate. Based on your effective rate, your capital gains rate will be 0%, 15%, or 20%. 0% is for the lowest brackets and 20% is for the highest bracket. Most of us would be subject to 15%. Look at the IRS chart.


I answered the question correctly, sorry you donít understand why.


Long term capital gains are not at the effective rate. Could be close though but not exact. Long term capital gains are taxed at 0%, 15% or 20% depending on your bracket aka marginal rate. The effective is just a total average but not the same as a long term capital gain rate.

Please explain your answer.

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#7241713 - 08/01/18 08:30 AM Re: Selling the ranch - Taxes? [Re: Txduckman]
GOLDSTEIN Online   content
THF Trophy Hunter

Registered: 01/16/07
Posts: 8661
Loc: Keller, TX
Originally Posted By: Txduckman
Originally Posted By: Pitchfork Predator


I answered the question correctly, sorry you donít understand why.


Long term capital gains are not at the effective rate. Could be close though but not exact. Long term capital gains are taxed at 0%, 15% or 20% depending on your bracket aka marginal rate. The effective is just a total average but not the same as a long term capital gain rate.

Please explain your answer.


Pitchfork knows what long term capital gains are. You are just not reading the way it is written. He didn't say "AT" any rate.
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www.SullivanFinancialPartners.com

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