Date: Fri, 28 Apr 2006
We purchased a home site in 2000, but never built the home. Now we want to sell the property, which has appreciated considerably over the past three years.
Date: Fri, 05 May 2006
Your gain for selling the property will be a long-term capital gain, qualifying for the 15% federal tax rate. (California gives no break for capital gains. For most taxpayers, the applicable tax rate is 9.3%.) Since the property was never used for a residence, the gain won’t qualify for the exclusion of gain from the sale of a principal residence. If you are interested in tax-deferral, you could plan a tax-deferred exchange to invest in a different piece of real estate.
If you live in California, you could have 3 1/3% of the sales price withheld for as a prepayment of California income taxes.
Hope this helps.
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