Capital gains tax?

[tall@wide]

What if you have been rolling farms over the years with 1031 exchanges and finally cash out.... Let's say you live off of cash one year and sell your current farm(s) to cash out for good. Is that still a normal capital gains tax based off the sold farms value, or would it be a zero capital gains tax based off zero income that year? I'm not cashing out but just curious thinking about the future.

 

[IowaBowHunter1983]

Long term capital gain. Sale price minus your cost basis which goes all the way back to the very first farm you started 1031 with. Federal is around 22% plus state.

 

[tall@wide]

Long term capital gain. Sale price minus your cost basis which goes all the way back to the very first farm you started 1031 with. Federal is around 22% plus state.

Ok..I didn't know if final 1031 sales were effected by income at all..I know al lot of things associated with capital gains are based off income, but land evidently isn't one of them.Thanks.

 

[deerdown]

Isn't there another 3.8% obamacare tax tacked on if income is over a certain amount?

 

[IowaBowHunter1983]

OK.... need to revise my answer.

Capital gains tax rate	Single (taxable income)	Married filing jointly (taxable income)
0%	Up to $47,025	Up to $94,050
15%	$47,026 to $518,900	$94,051 to $583,750
20%	Over $518,900	Over $583,750

As deer down stated there is the 3.8 surcharge. It kicks in as follows

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household (with qualifying person)	$200,000

 

[tall@wide]

OK.... need to revise my answer.

Capital gains tax rate	Single (taxable income)	Married filing jointly (taxable income)
0%	Up to $47,025	Up to $94,050
15%	$47,026 to $518,900	$94,051 to $583,750
20%	Over $518,900	Over $583,750

As deer down stated there is the 3.8 surcharge. It kicks in as follows

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household (with qualifying person)	$200,000

But does this apply to 1031 exchanges that are finally cashed in? If so, it's a great way to avoid a huge tax..Just live off cash for one year and sell your farm(s).

 

[IowaBowHunter1983]

But does this apply to 1031 exchanges that are finally cashed in? If so, it's a great way to avoid a huge tax..Just live off cash for one year and sell your farm(s).

Call your CPA on that. Pure guess I'd say no.

Doesn't take long to get to at least 47k threshold if your on multiple 1031 flips

 

[tall@wide]

Doesn't take long to get to at least 47k threshold if your on multiple 1031 flips

Yes, if that counts as income. I agree, definitely a cpa question.

 

[IowaBowHunter1983]

Yes, if that counts as income. I agree, definitely a cpa question.

It def counts as income. Been there a few times.