Exclusions From Taxation

[cpeters]

Does a married taxpayer over the age of 75 have some exclusions from taxation when selling property (real estate) as it relates to capital gains taxes? If so where is this reported? His property adjoins the home he resides in and has been in his possession for 39 years, plus.

[Chief]

Exclusions

The main question is does this property hold a separate title from the title for his home. If it is separate he will have capital gains on it. Age has no bearing on capital gains; he who has will pay up. There is no break in relation to age of tp. Also his social security will more than likely by 85% taxable income.
Is this an after fact sell? I know you feel sorry for these persons but he must face the music and pay up.

[cpeters]

The main question is does this property hold a separate title from the title for his home. If it is separate he will have capital gains on it. Age has no bearing on capital gains; he who has will pay up. There is no break in relation to age of tp. Also his social security will more than likely by 85% taxable income.
Is this an after fact sell? I know you feel sorry for these persons but he must face the music and pay up.

The property is titled to the same individuals as the home.

[S T]

As far as I know

There seems to be a mis-understanding amongst some of our senior citizens, that they think the magic number is age 70 or beyond and they no longer have to pay taxes.

For your t/p and circumstances I would say "no" they would still have to pay taxes, if the property produces a capital gain. Their only exclusion which could be full or partial would be the Sect 121 on personal home, unless of course they exercise some type of 1031 exchange, if that qualifies.

Sandy

[GIMoe]

Question

Their only exclusion which could be full or partial would be the Sect 121 on personal home...

If this piece of property was deeded and titled seperatly from the main home (as a seperate plot) then I would think that this would be treated as investment income and therefore not eligible for Sect 121. So, we need to go back to Chief's question:

The main question is does this property hold a separate title from the title for his home.

[jainen]

a new theory

I'm working on a new theory that since land is not subject to depreciation it can not have capital gain. I'm basing it on the rules about recapture, but I'm still missing a few pieces.

[Davc]

121 is not applicable to the sale of land adjacent to the home unless the home is also sold. There is no partial exclusion for selling part of the land. If he sells the house withing two years from the sale of the first property and it has been treated as part of the home he may amend 2006 and take an exclude a total gain up to the amount for his filing situation.

[wexeter]

1031 Exchange Possible

Davc is right on the money.

He could consider completing a 1031 exchange if he held, reported and treated the property as investment property. Investment property can be vacant land and does not have to produce income to qualify for 1031 exchange treatment.