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Sale of Property

2007-10-08 by

(or My Crystal Ball Just Exploded!)

Today we hear from Lea Anne in Kentucky who has a quick question. “I recently sold property for $25,000.00. How much, in taxes, will I have to pay?”

Dear Lea Anne,

These are my favorite kinds of questions. Let me dust off my crystal ball.
OK, let’s see if I can divine the answers from the generous clue you provided:

1) What kind of property this is –

a) It’s a painting?
b) It’s a car?
c) It’s your home?
d) It’s residential rental property?
e) It’s empty land?

2) When did you buy this?

a) Last week?
b) Last month?
c) Last year?
d) Five years ago?
e) You didn’t buy it – you inherited it?

3) Oh, and let’s see if I can intuit how much you paid for it, OK?

a) A million bucks?
b) Nothing?
c) $5,000?
d) $25,000?
e) The person you inherited it from paid $1,000?

4) And of course, there are the selling costs, and the improvements you may have made over the years, and depreciation you may or may not have taken, or should have taken….and….and…

Oh no! My crystal ball just exploded.

Sorry, I haven’t a clue.

And neither will anyone else, unless you provide more useful information. Answer those questions, and your tax pro can tell you how much tax you’ll have to pay.

And remember, you can find answers to all kinds of questions about sales of assets and other tax issues, free. Where? Where else? At TaxMama.com

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