I purchased a building lot 8 years ago for $90K. this year I built a spec house on the property (fair market value for the lot is $180K). I spent $500K on the spec house and sold it for $800K. Since I owned the lot for 8 years can I take the $210K total gain as a capital gain? If not can I somehow take the $90K appreciation on the lot as a capital gain? I obviously didn't hold the spec house for a year but I could treat it as an improvement to add to the basis of the lot.
