Re: taxes on land sale

Posted by Thack on September 28, 2006 at 17:56:28 from (4.161.93.35):

In Reply to: taxes on land sale posted by centmo on September 28, 2006 at 14:19:25:

If they file jointly they can lock in a profit of $500,000 and owe nothing.

IRS regulations also allow you to use your valuable gain exclusion to shelter profit from selling vacant land next to your principal residence. You can even sell the parcel with your home and the surrounding vacant land in completely separate transactions.

"However, the land must be sold within two years before or after you sell the parcel containing your house".

Also, the land must be adjacent to that parcel and be used as part of your principal residence.

For example you can sell a one-acre parcel with your home in one transaction and a 29-acre adjacent parcel of vacant land in a separate transaction — and use your gain exclusion to shelter the combined profits from the two sales.

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