[Marcie]

Hi all… We have an unimproved parcel of land that was gifted to us by my husband’s relative, which was inherited by them.

So, if my understanding is correct, it means we will wind up paying capital gains tax on the whole sale.

We will be using the funds from this to purchase a home in a new area that we are relocating to (all transactions in Texas).

Would it be more beneficial to sell before the end of the year or is there any advantage to having both transactions in the same year?

[Jenny]

You get a step up in cost basis when you inherited the land. So, the capital gains in minimal.

[Kevin]

Gifted amount will be the stepped up basis when the relative inherited the land.

The receipt of the land and sale of the land of done in the same year will likely cause large tax consequences as you will have, potentially, gift tax and the capital gains on the difference of the sale and the gifted basis.

Sale of the land and purchase of the residence is relatively irrelevant as far as timing.

[Jeremy]

Put up a mailbox establish residency there even if its just paying a power meter on a temp pole

Live there 2 years as your primary residence “on paper”
Sell it capital gains tax free

[Author]

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