capital gain on primary residence
Hello,
I have a primary residential property with 35 acres landwe have been living there for years. If I only sell 10 acres of land from that property, does it qualify for capital gain exemption on primary residence?
Thanks
Trina
Permalink Submitted by Alan Spross on Mon, 2010-10-18 20:01
This question is outside the scope of this forum, but will respond this time.
When adjacent land to a qualifying primary residence is first sold in a year without the residence, the gain must be reported on the land after propertly allocating the cost basis for the portion of land sold. However, if the residence and remainder of the land is sold within two years of the sale of the first vacant parcel, the combined sale can be reported including the gain exclusion. An amended return for the year of the original land sale can then be filed to secure a refund of the original capital gains taxes.
The two year period for incorporation of both sales for cap gain exclusion purposes can also be applied if the residence is sold first and the land sold later within 2 years.