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I am thinking of selling timber land I own in Idaho. I live in CA.
I am thinking of selling timber land I own in Idaho. I live in CA. If I take the profit I made from the sale of the land and invest it in a IRA can I not pay taxes on it until I cash out the IRA? Thank You Wanda
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No, at least not directly. You would pay taxes on the gain from the sale to the state of Idaho and the IRS, and also report it on your CA taxes (although the credit you get for having paid tax to Idaho should offset a good chunk of what you would owe CA). If you qualify for a deductible IRA contribution then the amount you invest in your IRA can be deducted from your taxes - up to the $5K annual contribution limit ($6K if you are fifty or older). So you really do come out ahead - you pay capital gains tax on the gain in the property value, but get to deduct your IRA contribution against regular income, which is often a higher tax rate. |
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