Compare costs that affect sale proceeds
Illustrative categories only: responsibility and amount depend on the agreement and parcel.
Swipe sideways to see every column.
| Item | What changes it | Who to ask |
|---|---|---|
| Broker fee or marketing | Listing agreement or chosen sale route | Agent or marketing provider |
| Title, escrow, recording | Location, provider, and contract terms | Closing provider |
| Survey or due diligence | Existing records and buyer requirements | Surveyor and closing provider |
| Tax and lien payoffs | Actual account and title findings | Tax collector and title provider |
| Income tax on gain | Basis, proceeds, holding and tax circumstances | Tax adviser |
Which costs reduce what you take home?
Ask for an itemized preliminary closing estimate for each serious offer. Note who pays the title policy, recording, survey, commissions, and any required payoff. Not every cost belongs to the seller; the contract and local practice matter.
Compare the amount you expect to receive at closing, the work you must do, and the conditions that let a buyer walk away. A large price with unresolved contingencies is not cash in the bank.
Will you owe capital gains tax when selling land?
The IRS generally measures capital gain as the amount realized minus adjusted basis. Basis can differ for inherited or gifted land, and selling expenses may affect the calculation. A property-tax bill is not your federal income-tax basis.
Do not apply a universal tax percentage or assume a home-sale exclusion covers vacant land. A tax professional can review ownership, basis records, improvements, selling expenses, and reporting requirements.
Sources: IRS Topic 409, capital gains and losses · IRS Publication 551, basis of assets
Can a 1031 exchange or other strategy eliminate the tax?
The IRS says qualifying like-kind exchanges concern real property held for business or investment, not real property held primarily for sale. An exchange follows rules and is not a simple promise to erase tax. Talk with an exchange professional and tax adviser before a sale closes.
If the parcel came through an inheritance, ask about its date-of-death basis. If Texas land has special appraisal, check change-of-use rollback separately from federal capital gains. These are different calculations handled by different authorities.
Sources: IRS, like-kind exchanges of real estate · IRS, inherited property basis · Texas Comptroller, special appraisal
Frequently asked questions
Who pays land closing costs?
The agreement assigns many costs, and local practices differ. Request an itemized estimate rather than relying on a universal rule.
Are property taxes the same as capital gains tax?
No. Property taxes are assessed by local authorities; federal gain uses proceeds and adjusted basis under tax rules. One bill cannot tell you the other.
Does inherited land have a different basis?
Often. The IRS generally uses fair market value at the date of death, subject to exceptions. Ask a tax adviser to review the estate records.
Can I use a 1031 exchange for land?
Some business or investment real property may qualify if all requirements are met. Property held primarily for sale does not qualify; get advice before signing a transaction plan.
Sources and further reading
- IRS Topic 409, capital gains and losses
- IRS Publication 551, basis of assets
- IRS, like-kind exchanges of real estate
- IRS, inherited property basis
- Texas Comptroller, special appraisal
General information only. Local rules and individual title or tax facts require a qualified professional.