1099S real estate land sale question

cudaman
cudaman Member Posts: 5 Newcomer
in Income

I sold a vacant lot in Florida this year. I reside in Connecticut. The transaction was handled by a title company and a form 1099S was filled out for the sale price $25K. My question is do I have to pay any taxes on the land sale? Do I have to file that 1099S form with my taxes? Thanks for any help.

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  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 258

    Hi Cudaman,

    Yes, you must report the Form 1099-S for the land sale on your tax return. Keep in mind that your capital gain is the net sales price - adjusted basis.

    Net Sales Price = (sales price - qualifying sales costs)

    Adjusted Basis = (purchase price + purchase costs + major improvements)

    Where do you enter it?

    When the Form 1099-S is received for the sale of a vacation home, investment property, or land, enter the sales amount shown on the Form 1099-S on the Stock or Investment Sale Information screen along with the other pertinent information relating to the sale.

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  • cudaman
    cudaman Member Posts: 5 Newcomer

    Hi Matthew, Thanks for the quick reply. I did some limited research on capital gain tax on land sales and is it correct that i would pay 0% zero tax since i am in the single bracket and i have owned the land for more than 10 years and the sale price was well below the $44,625 limit; again i thank you very much for the help!

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  • JMSSGV
    JMSSGV Member Posts: 74 Level 5

    The $44,625 limit for the capital gain tax bracket includes ALL your income—not just the capital gain. If your taxable income (including the long-term capital gain is between $44,625 and $492,301, some of the gain will be taxed at 15%. There's a handy calculator on this website: https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates

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  • kiarab
    kiarab FreeTaxUSA Agent Posts: 59

    Hello,

    I would just like to agree with JMSSGV. The tax bracket that you are taxed on is based on all of your TAXABLE income, not just the taxable gain of the sale of your land sale. So if your total taxable income is higher than the limit for 2023, you may be taxed on some of it. For more information: https://www.irs.gov/taxtopics/tc409 (I do not think they have updated this for the 2023 amounts yet)

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  • cudaman
    cudaman Member Posts: 5 Newcomer

    Hi Just wanted to say thanks to everyone for the help. I am learning more about capital gains than i ever knew. I am sure i'll have more questions.

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  • cudaman
    cudaman Member Posts: 5 Newcomer

    Hello I have a follow up question on the land sale would my net sale price be Sold for $25,000 - $2500 sale commission = $22,500 net sale price? Also would property taxes paid all these years of about $4800 plus the purchase price be deducted from the net sale price giving me the adjusted basis ?Thanks for any help!!!

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  • rachels
    rachels FreeTaxUSA Agent Posts: 56

    Hi!

    Your net proceeds will be the sales price minus your selling expenses. Selling expenses include commission paid on the sale, so yes, you would generally reduce the sale price by the commission you paid.

    The property taxes you paid will not affect the basis of the property, so will not reduce the taxable gains from the sale of the property.

    Your taxable capital gains will be the net sales price - adjusted basis. The basis of your property is typically the amount you paid for the property when you originally bought it. For more information about things that may adjust your basis, please see:

    https://www.irs.gov/publications/p551#en_US_202212_publink1000256938

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  • cudaman
    cudaman Member Posts: 5 Newcomer

    Thanks Rachels and Jmssgv for the help!!!!

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