I sold a 1 foot swath of my 40 foot wide lot for "X" dollars. (This land is added to the size of the adjacent lot which will allow a new house to be built there). The use of the house which is my permanent address is unaffected because I received an easement for exclusive use. How do I determine the cost basis for this sale? Would it be the 1/40 of the land portion of the original purchase price of the house (i.e house and land)? Also, TurboTax is not set up to handle a real estate sale like this and so treats this sale as equivalent to the sale of a house. The end result is that I owe no tax on nearly 100% of the proceeds. Does this make sense?
