If you no longer own the land and will not pay property taxes on it in the future, report this as an Investment Sale. Your basis will be the percentage of the square footage sold in relation to the total square footage of the land you own multiplied by the cost of the land (not the entire property). A recent tax assessment should provide the information you need to make that calculation.
Your basis in your home is increased by the improvements you make after you purchased the home. If the portion of the property that was sold includes specific improvements that you can document, then include those costs in the total land basis. For instance, if a hedge or flower bed was added to that portion and sold with the land, you would include those costs.
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