Long/short Capitol Gains Clarification.
Any help will be appreciated.
Closing tomorrow on lot and already have a purchase offer. Are short term capitol gains 20% and long term 15%? Or, if I sell now will I be taxed at my rate of 40%? This is a building lot and not rental property. What are the tax laws? Can a building lot be rental?
Thank You
In the best case, your short term capital gains tax rate will be the same as your ordinary income tax rate (Schedule D).
In the worst case, the IRS will treat your activity as a dealer to real estate and your profit will be taxed as ordinary income (Schedule C) AND subject to self-employment taxes (Schedule SE).
Consult your personal tax professional for specific details.