Tax Question - Posted by BobS

Posted by dieseldan on July 18, 2004 at 17:33:48:

I found the following comments at the link below. For clarification check with a tax expert:

Sale of Vacant Land Used as Part of Residence
No gain is required to be recognized on a sale of land that you owned and used as part of your residence if the dwelling itself is sold within two years before or after sale of the land. In order to qualify for this special treatment, land must be adjacent to land containing the dwelling and all parts of the sale must meet the two-years-out-of-five requirement. One exclusion will apply to the combined sale of land and dwelling.

Tax Question - Posted by BobS

Posted by BobS on July 17, 2004 at 21:39:50:

I have a question that I am hoping the readers may be able to help with. My parents have a house that they are planning on selling. They have lived there for over 45years. They own the house and three other adjacent lots. The lots each have their own property ID #, but it is all taxed by the local municipality as one parcel. My question is this… This property is on a lake, and as such, my parents can most likely make more money if they break up the property and sell each lot. However, if they break it up, is it still possible to take the 500k tax free gain that the IRS allows on sale of a residence? Since it is taxed as a single parcel…do they have to sell it as a single parcel to take advantage of the tax savings? Thanks in advance for any help!!