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Christmas Tree Farm |
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Dear Mrs. Lank: We recently sold an acreage that we have owned since 1995. Ten years ago we planted over 5,000 Scotch Pine seedlings to be used for a Choose & Cut Christmas Tree Farm. My husband and I cared for them until the job became too large for us at our ages, I'm 76 and my husband is 77, thus we sold to get out from under the responsibility of mowing, etc.
My question is, what and how much tax will we have to pay the IRS on what profit we made? We used part of the proceeds to pay off our mortgage on our home. Our house is connected to the land we sold and we have lived in the house for 20 years. Are there any allowances for people past a certain age? |
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No special tax breaks apply to the sale of that land, except that your profit will qualify for favorable long-term capital gains rates, no more than 15 percent federal. Your age has nothing to do with it, and the IRS isn’t interested in what you did with the proceeds.
If you simply kept the land without selling off trees yet, your cost basis is the original purchase price plus anything you’ve spent on permanent improvements, which would include the cost of those seedlings. It may be more complicated than that, so consult a tax professional, with whom you can discuss your investment in detai. |
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Edith
Originally published on November 6, 2006 |
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