Capital gains taxes

When you sell property, you will likely incur capital gains taxes based on the difference between your sale price and your basis (your original purchase price plus improvements and less depreciation).

If your land has greatly appreciated during your ownership, you may owe significant federal and state capital gains taxes. (Note: Iowa does not tax capital gains resulting from the sale of property used in trade or business for at least 10 years. Also, basis is automatically reset to the current fair market value when the owner dies.)

Options such as the Like-Kind Exchange are specifically designed to defer capital gains taxes. Other options, such as bargain sales or donations, can reduce or eliminate these taxes completely. (See the side-by-side comparison.)

More information on tax issues:
Income taxes | Capital gains taxes | Estate & inheritance taxes | Property taxes | Cautions