The gain on sale of vacant land that was used as part of the principal residence can be excluded if the land sale occurs within two years before or after the sale of the dwelling unit. However, the sale of the property is treated as one sale for the purposes of the home sale exclusion. You must meet the rules for the home sale exclusion based on the 2023 sale - 2 out of 5 years before sale you owned it and it was used as your principal residence. also you did not use the home sale exclusion on another residence sold with 2 years of the 2023 sale.
since 1) you meet the time period test (sale within 2 years + or - of sale of principal residence) for this sale; 2) you meet the use test (used as part of your principal residence) ; and 3) you qualified for the home sale exclusion for the 2023 sale even if you didn't use it; you would report the sale of the land as a home sale. so there would be reported the sale less closing costs + the basis allocated to the land not sold originally an then the home sale exclusion would be used. hopefully when you sold in 2023 you did not included the basis allocated to the lots not sold but it probably won't make a difference.
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