Cutting the tax when you sell property

Years ago I inherited land that I'll never use. Now I'm trying to figure the most sensible way to get rid of it. If I sell it, I'll have a hefty capital gain. How can I ease the tax pain?

You could seek a developer or private buyer who'll pay you in a series of installments over several years, rather than a lump sum. Although this strategy wouldn't eliminate the tax, it would soften the blow by spreading it over the same number of years. And if you're willing to provide a mortgage to the buyer, you'd earn some interest income as well. Keep in mind, though, that if the capital gain rate rises before you collect the full sum, you'll pay more tax overall.

If you'd rather defer the tax on your gain indefinitely, a like-kind exchange may be a better option. To postpone all the tax, you must find another property of equal or greater value that you'd like to own in place of yours, and you can't receive cash or property other than real estate in the exchange. Your basis for the new property will equal your basis in the property you currently own. When you eventually sell the replacement property, you'll recognize the gain and pay tax on it.