Tax implications of selling quickly?

Question

I know ultimately I need to ask my accountant but he’s busy and expensive to ask preliminary questions.
I won some land at a county tax auction. My agent has done some research and determined that I’m able to sell it as soon as they mail me the deed and there’s no holding period.
I would love to improve / build on the land but it’s just not in the schedule for the next few years so I’m thinking it’s best to sell it. Afterall I purchased it as an investment.

But someone told me that capital gains taxes on a one year investment would be terrible. Any truth to that?

If I sold it and bought another vacant land property that would be more useful to me to hold, would I then be able to defer those taxes?

Details:

San Bernardino County California

Bought 10acres for $14k

Looking at asking $40k-50k

I’d like to buy a small parcel with lake rights in Lake Arrowhead for ~$30k so we can use the private lake.

Thank you for any guidance in navigating this. I’ve only done BRRR strategy so I’ve never sold real estate before.

Steve Vaughan · Answer

Basically you should get favorable long term cap gain treatment if you owned it 365+ days.

Less than 365 days and it's ordinary income. SE taxes, the works.

But depending on your household income otherwise, a $20k ish gain probably isn't bad.

Eric Mcginn · Answer

Thank you for this explanation, that makes sense. I wonder what the long term cap gains taxes are vs regular income taxes.

You’re probably right that it’s not worth holding just to avoid some extra taxes, because with that money I could to it all over again potentially.