On an inherited piece of land, what role does capital gains play.
Thanks all!!!
If you sell for a profit, you pay capital gains taxes on the profit. There are no taxes until you sell.
It’s important to note on inherited land, your “cost” (basis) is the value of the land as of the date of death, as opposed to what the deceased may have paid for it.
for example, Dad bought land in 1932 for $500. It’s worth $10,000 when he dies and leaves it to you. You sell it for $12,000. Your taxable gain is $2,000.
If you didn’t inherit it (maybe he deeded it to you before he died) then other rules apply.