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Mar 25th, 2012
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Selling the ranch - Taxes? #7239940
07/30/18 06:52 PM
07/30/18 06:52 PM
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Cedar Creek, TX
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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.
Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240005
07/30/18 07:53 PM
07/30/18 07:53 PM
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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?


Matthew Daseke
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Dave Perry-Miller Real Estate,
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Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240017
07/30/18 08:05 PM
07/30/18 08:05 PM
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Cedar Creek, TX
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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.
Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240028
07/30/18 08:15 PM
07/30/18 08:15 PM
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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

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240053
07/30/18 08:46 PM
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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.

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240381
07/31/18 02:41 AM
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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

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240409
07/31/18 03:13 AM
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Is it possible to do a 1031 on just the capital gains portion of the sale?



Re: Selling the ranch - Taxes? [Re: stxranchman] #7240438
07/31/18 04:24 AM
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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.

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7240607
07/31/18 01:37 PM
07/31/18 01:37 PM
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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
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www.insured-wealth.com
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Re: Selling the ranch - Taxes? [Re: Txduckman] #7240660
07/31/18 02:26 PM
07/31/18 02:26 PM
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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


...and have dominion over the fish of the sea, and over the fowl of the air, and over every living thing that moveth upon the earth. Gen. 1:28
Re: Selling the ranch - Taxes? [Re: Creekrunner] #7240820
07/31/18 04:48 PM
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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.

Re: Selling the ranch - Taxes? [Re: Pitchfork Predator] #7240823
07/31/18 04:56 PM
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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.

Re: Selling the ranch - Taxes? [Re: Txduckman] #7241042
07/31/18 08:14 PM
07/31/18 08:14 PM
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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
Re: Selling the ranch - Taxes? [Re: Pitchfork Predator] #7241053
07/31/18 08:22 PM
07/31/18 08:22 PM
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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.

Re: Selling the ranch - Taxes? [Re: Txduckman] #7241713
08/01/18 01:30 PM
08/01/18 01:30 PM
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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
Re: Selling the ranch - Taxes? [Re: GOLDSTEIN] #7241925
08/01/18 04:37 PM
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Originally Posted By: GOLDSTEIN
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.


up

Been missing you Goldstein, where you been? Glad to see you back.


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Re: Selling the ranch - Taxes? [Re: Pitchfork Predator] #7241961
08/01/18 05:18 PM
08/01/18 05:18 PM
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Originally Posted By: Pitchfork Predator
Originally Posted By: GOLDSTEIN
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.


up

Been missing you Goldstein, where you been? Glad to see you back.


cheers Just busy, sir. Still around!



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Re: Selling the ranch - Taxes? [Re: JohnRussell] #7242266
08/01/18 09:51 PM
08/01/18 09:51 PM
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Cedar Creek, TX
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Pitch is right and I understood what he meant. Based on what I make now, plus the added...the long term rate will or may change.

I pretty much figure it this way.

I love the ranch, but going there adds 10-14 hours of driving. To that end, I spend... let's call it $1400 a month to keep the ranch. Yes, I get equity, but with it also comes depreciation of the house and everything on it.

So, by taking the cash, paying taxes on it, using what is left over to pay off as much as possible, I end up with a heck of a lot more cash per month to go where I like and do what I like.

Not an easy decision in the slightest... we have a lot of sweat equity in the place, but the chance to go DO more vs staying at home or going there when we get time....

We just decided we would rather take advantage of the increase in price and sell.

So, depending on what it sells for, we will pay long term capital gains on the net proceeds, added to our current year taxable income.

Thanks all!

We may let things settle down and find something else a lot closer, maybe buy something on the coast, who knows. We may let things settle down and buy something closer or on the coast, who knows.. we will see.


Maybe I will go on a hunt out of state.. heh wink

R


Hunting is easy..it's getting permission from your wife that is tough.
Re: Selling the ranch - Taxes? [Re: JohnRussell] #7243449
08/02/18 11:12 PM
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Sounds like we need to have at least one more get together before it sells. Super place with tons of game. Sure gonna miss it. Wherever y'all end up buying, we'll still get together. Lots of good times at that killer dining table.

Last edited by Erathkid; 08/02/18 11:13 PM.

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Re: Selling the ranch - Taxes? [Re: JohnRussell] #7243828
08/03/18 11:55 AM
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Oh yea, the table is staying with me. I plan to head up there soon and grab it and a few other things that will not be sold with it. wink

R


Hunting is easy..it's getting permission from your wife that is tough.
Re: Selling the ranch - Taxes? [Re: JohnRussell] #7244990
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John, If you filed a schedule F and depreciated assets such as fencing, equipment, etc. you need to consider the consequences of recapture before you make your decision. Being able to prove up your basis in the ranch is the key.

There is also net investment tax to consider as well. Find a 1031 specialist beforehand, so you don't trip on something that will defeat your election.

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7245347
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Warranty Deed sold for the sum of ten dollars.

Re: Selling the ranch - Taxes? [Re: GOLDSTEIN] #7246975
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Originally Posted By: GOLDSTEIN
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.


So please explain what this means..."Long term capital gain will be the effective tax rate."

Are you saying that long term capital gains rate will be equivalent to the effective tax rate of the individual?

Re: Selling the ranch - Taxes? [Re: JohnRussell] #7247025
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They are putting the cart before the horse. The effective tax rate is just total taxes paid divided by taxable income for an individual. You take your wage taxable income which is at the marginal rate and long term capital gains taxes (0, 15 or 20%) plus any other special taxes to get total paid. LTCG rate does calculate out pretty close to the effective rate but can only be done after you done all your taxes. I guess since they are financial planners they say that as an estimated for planning? You still cannot get effective rate until actually doing your taxes.

Re: Selling the ranch - Taxes? [Re: Txduckman] #7247294
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Originally Posted By: Txduckman
They are putting the cart before the horse. The effective tax rate is just total taxes paid divided by taxable income for an individual. You take your wage taxable income which is at the marginal rate and long term capital gains taxes (0, 15 or 20%) plus any other special taxes to get total paid. LTCG rate does calculate out pretty close to the effective rate but can only be done after you done all your taxes. I guess since they are financial planners they say that as an estimated for planning? You still cannot get effective rate until actually doing your taxes.


Answered the question, long term capital gains rate, whatever effective rate that ends up being.....up


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