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Article Date:
May 2016


Word Count:
1296

 

 

Tax Tips for Vacant Lot and Unproductive Land


Let’s say that you own a vacant lot or some unproductive land. You plan to keep the lot or land for a number of years and then sell it at a healthy profit.

 

Meanwhile, you incur costs to mow the grass and insure the property. You also pay taxes on the land and interest on a mortgage.

 

If you want the best after-tax profits and hope to deduct the carrying costs currently, you need answers to the three questions below:

 

·

Do you itemize deductions or not?

·

To what extent does the 2 percent of adjusted gross income floor on miscellaneous itemized deductions trash your deductions?

·

Will the alternative minimum tax (AMT) delete some deductions?

 

Now that you have answered the questions, you need a strategy for each of the costs, and this strategy can change from year to year. In some cases, the strategy involves making a formal election in your tax return to capitalize some or all of the carrying costs.

 

So the question is: what costs do you have, what tax problems do they face, and what should you do to get the best tax benefits? ... Log in to view full article.

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