You may report $0 or you may allocate the sales price and the selling costs across both the land and the improvements on the land.
The cost of land and the cost of improvements on the land may be allocated. You may need to refer to local property tax records, the original purchase documents or the documents of sale.
For instance, your local property tax statement may report that the value of the land for the property is $5,000 and the value of the structure is $45,000. If you sold the property for $200,000, the value of the land could be allocated as:
Land $ 5,000
Structure $45,000
Total $50,000
Land assumed to be 5,000/50,000 = 10%
10% X sales price of $200,000 = $20,000 allocated to cost of land.
A similar allocation can be made for the selling expenses.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
