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Should I prepay taxes for land sold this year?
Posted on 6/17/23 at 4:19 pm
Posted on 6/17/23 at 4:19 pm
I just sold a piece of land and made some money. Is there an amount of profit in which I need to prepay the capital gain tax?
Bought in 2021 for $100k
Sold now for $170k
Taxes should be $10500 (can I deduct any of the costs associated with buying or selling the land?)
Bought in 2021 for $100k
Sold now for $170k
Taxes should be $10500 (can I deduct any of the costs associated with buying or selling the land?)
2
Posted on 6/17/23 at 6:08 pm to LSUSUPERSTAR
I would submit the estimated tac with a 1040ES. It's not a prepayment since the IRS will penalize you if your tax due exceeds $1000 when you file your 1040.
If acquisition and liquidation costs have not been previously amortized or expensed, these can be added to your basis for determining capital gain. Supplying this based information provided and assuming this owned personally. Could be incorrect if this scenario is not true.
If acquisition and liquidation costs have not been previously amortized or expensed, these can be added to your basis for determining capital gain. Supplying this based information provided and assuming this owned personally. Could be incorrect if this scenario is not true.
Posted on 6/18/23 at 8:28 am to CHGAR
quote:
the IRS will penalize you if your tax due exceeds $1000 when you file your 1040.
Not necessarily. You can also meet estimated tax requirements by making sure you have paid 100% of your prior year’s tax. Increases to 110% if AGI is over 150k joint / 75k separate. You can then pay your remaining balance in April.
This post was edited on 6/18/23 at 8:44 am
Posted on 6/19/23 at 9:14 am to CherokeeTiger
Good advice. I have paid the penalty some years. I am no tax expert by any means. The penalty calc includes when the income occurred so you pay a little more for transactions early in the year. Effective tax rate vs nominal rate is a consideration. Seems like I remember them giving a pass for the first time you under pay. No need to pay 100% of expected amount in any case. If you really owe $10k, you could pay $9k and settle up with your annual return. The amount depends on % of overall income.
Posted on 6/19/23 at 9:57 am to LSUSUPERSTAR
quote:
can I deduct any of the costs associated with buying or selling the land?
Yes. Things like commissions paid to agents would reduce your gain.
As far as prepayment, I would not. Like another poster said, you won’t get penalized as long as you have 100% (or 110% depending on your AGI) of PY’s tax paid in. I would set aside the amount you’re going to pay in tax in an account and earn interest on it until you file.
Posted on 6/19/23 at 1:24 pm to Weagle25
Thanks all.
This is what I had in mind. We unfortunately are fully paid for the 2022 tax year.
quote:
I would set aside the amount you’re going to pay in tax in an account and earn interest on it until you file.
This is what I had in mind. We unfortunately are fully paid for the 2022 tax year.
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