About Net Investment Income Tax (NIIT)

VNT24
VNT24 Member Posts: 2 Newcomer
in Situation & Life Changes

i am planning to sell some land inherited abroad from my dad who passed away a few years ago. Based on the expected sale price and my cost basis, my AGI for 2025 will put me over the threshold when i will need to pay Net Investment Income Tax (NIIT), it seems.

Will the capital gains on this sale be considered investment income subject to NIIT?

Thanks for any feedback.

Answers

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 654 image

    Hi VNT24,

    The IRS says this, "The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts."

    So I would say yes, it will likely apply to you. For more information on the NIIT, see IRS.gov.

  • VNT24
    VNT24 Member Posts: 2 Newcomer
    https://community.freetaxusa.com/discussion/comment/5606#Comment_5606

    Thanks Matthew! The confusion arose because an inheritance is'nt an "Investment". However, i can see how IRS might consider any gains on an inheritance as return on investment.

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