Capital Gain Tax Rate On Land Sale
I purchased a piece of land in April 2004. I intend to sell it the summer of 2005. I will most likely do a complete 1031 exchange, but I am contemplating doing a partial 1031 exchange and paying taxes on the cash received.
Can someone tell me what the capital gain tax rate would be if I elect to keep some of the cash?
Thanks.
Since you will sell the property after it is elibible for long term capital gains, the "boot" will be taxed at your long term capital gains rate. In most instances, under current law, this is 15% on the Fed. Since you have no depreciation, this is what you will pay. If your gain had a depreciable component, the capital gains rate on that part is 25%.
You would qualify for capital gain tax rates. The maximum Federal rate is 15%, you would not be subject to Depreciation Recapture (it would have been 25% if you did) and my have state taxes. Cash and/or mortgage boot is applied first to Depreciation Recapture and then to Capital Gains.
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