I own a vacation home on 1.02 acres on a lake. We bought the land for $75000 and made capital improvements of $230000 (built a house, added a boat dock, landscaping, etc). The property owners next to us built a house too close to our property line (12 feet instead of 15 feet as listed in the covenants). After owning the property for a couple years, they decided to sell and could not due to the violation. The only recourse was to do a property exchange of approximately 109 sq ft with them. The property line was redrawn to give them another 3 feet of our property adjacent to their house, and we got the equivalent square footage of their property on the backside (away from the lake). In addition they paid us $25000 because this is a narrow portion of our land and losing that 3 feet of land has impacted what we can do if we want to build a garage. We would no longer be able to build a 2 car garage, we would only be able to build a 1 car garage.
I am trying to determine to cost basis of the land. If I just due the straight math, it would only come to around $200, however that portion of the land had a much larger value to us than that. Would using the delta in property value between a 2 car and 1 car garage be reasonable? Lake property is fairly unique, 1 acre of land that is waterfront is worth the same as 10 acres of land that does not have water access.
You'll need to sign in or create an account to connect with an expert.
To clarify, what is the reasoning for this? To value the property as a rental or future sale? Or something else?
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
knownoise
Returning Member
Fuzzy Red Baron
Returning Member
chunhuach
Level 1
cparke3
Level 4
AJ_52
Level 2
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.