Capital gains taxes take a significant chunk out of the profit you make in real estate. According to SmartAsset, Oklahoma has a relatively low capital gains tax rate of 4.75 percent maximum. However, coupled with the federal rate, you might lose as much as 29.75 percent of your profit to taxes.
If you have an inherited piece of real estate and want to avoid or delay paying capital gains tax, see the tips described below. Sometimes, you can avoid the capital gains tax altogether.
Sell it immediately
The government taxes capital gains differently for inherited real estate. If you sell inherited property immediately, the IRS does not consider the sale a capital gain. However, this is only true if you sell the property for the same price as when you first inherited it. For example, if you receive a piece of land valued at $100,000, you will not pay capital gains tax on any sale equal to or less than $100,000.
Rent or exchange the proceeds after a sale
Renting the property also avoids the capital gains tax. If you wish to sell the property in the future, you can choose to use the profits to buy another property. This is a 1031 exchange, allowing temporary deference of capital gains taxes. Remember that the IRS only permits purchasing like-kind properties for 1031 exchanges.
The methods described above only cover a small portion of handling inherited real estate. If you are not an expert, it is best to explore all your options and consult with someone who knows about inheritance and capital gains laws.