Just sold a piece of property in Ga. We are Georgia residents, can someone give me some guidance about what taxes need to be paid, federal, state, capital gains and how soon, this quarter or in next’s years tax return.
If you sold in 2023, you need to report the income on your 2023 tax return, which will be filed in 2024. But you may have to make an estimated tax payment if this will be a significant amount of your tax for the year, or if you are already under-withholding from your job or other income.
Capital gains is the type of tax within the category of state and federal taxes. It’s not a separate tax per se.
If you’ve held the property more than one year, you’ll need to pay the tax at long-term capital gains tax rates. If less than one year, you’ll pay at short-term rates (which for federal are the same as ordinary income tax rates). If this happened to be your personal residence, you may not have to pay taxes on the gains at all.
The tax owed will be based on your profit, which is the difference between sales proceeds (after selling costs) and your basis (usually purchase price plus what you paid for certain improvements).
How much you should pay in estimated taxes for this quarter is going to depend on the amount you made from the sale, your marginal tax rate, and how your other withholdings compare to your other tax owed.
Couple of assumptions for my response:
- This is NOT your primary residence
- This is strictly raw land
- You have held the property more than a year
- You are not going to turn around and buy another piece of property
Your capital gain is going to be the difference between the purchase price and your sale price. You can also adjust the acquisition and disposal basis for closing costs using IRS Pub 551. Once you do that you will have your actual Net Profit.
You need to pay capital gains tax during the quarter in which it was realized. The next quarterly payments are due April 18, 2023. You can use IRS Form 1040ES and GA Form 500ES to make the quarterly payment.
Disclaimer: This is just an opinion, not advice.
correct, not primary residence, just property (we did put a barn on it, but that is paid for), we have owned the property since 2018 and no we are not purchasing any land. We are using to pay off some debt and then part towards a downpayment towards a house when we find the one we want.
OK, because you owned the property for more than one year, You have a Long Term Capital gain or loss.
Your basis in the property is what you paid for the property plus the cost of improvements (barn). You sell the site for more or less than your basis.
You may receive form 1099-B or form 1099-S.
You report the sale on 1040 Schedule D and form 8949.
As was mentioned earlier, you may want to make an estimated payment to the IRS and to the taxing authorities in Georgia. Or increase your withholding for taxes.