Do I have to pay capital gains taxes if I sell land off my primary residence (appraised at $32k) now for $80k? If so, what is the typical tax rate? lived there 11 months

[b_scott003]

I've lived there 11 months now.  Based on the appraisal when I bought the house, the land is valued at $32k.

[TomYoung]

I'm not sure I'm following along with what happened here.  It sounds like you partitioned the land your primary residence is sitting on and sold land adjacent to your new, smaller lot on which your residence sits.  I'm not sure if the $32K appraisal figure applies to your original purchase of the entire plot of land, or just the part that you sold off.

But assuming that my assumption as to what happened here is correct, Pub 523 has this to say about the situation:
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Vacant Land Next to Home
If you have vacant land adjacent to the land on which your home sits, you can only claim the sale of that land as part of a sale of your home if ALL of the following are true:

• You owned and used the vacant land as part of your home.
• The sale of the vacant land and the sale of your home happened within 2 years of each other.
• Both sales either meet the eligibility test or qualify for partial tax benefits as described earlier.

If  your  sale  of  vacant  land  meets  all  these  requirements, you must treat that sale and the sale of your home
as a single transaction for tax purposes.

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If you don't anticipate selling your home within 2 years of this land sale then the partial sale of land gets reported as a capital gain.  You'll need to allocate some portion of the original cost of the land to the sold portion and calculate your gain accordingly.  It will be short term or long term gain depending on whether you sold a year or less after purchase or more than a year after purchase.

Short term capital gains are taxed at marginal, "ordinary income" tax rates while long term rates can range from 0% to 23.8% depending on the amount of your other income.

Tom Young

[rdoss5]

I sold my home and vacant lot next to my home to two separate buyers on the same date in 2020.  From what I understand based on Pub 523 I can claim the sale of the home and land as a single transaction since I meet the eligibility test.  How do I do this?  Do I just add the two sales together and enter them under the Sale of Home in Turbo Tax?  I did receive a1099S for the sale of the home and land.  Thanks!

[MarilynG1]

@rdoss5 If you received one 1099-S that includes the sale of both the home and the land, click this link for info on How to Enter a 1099-S. 

[rdoss5]

Thanks for the reply.  I know where to enter the 1099S but Pub 523 says this:  

Vacant land next to home.

 You can include the sale of vacant land adjacent to the land on which your home sits as part of a sale of your home if ALL of the following are true.

• You owned and used the vacant land as part of your home.

• The sale of the vacant land and the sale of your home occurred within 2 years of each other.

• Both sales either meet the Eligibility Test or qualify for partial tax benefits, as described earlier.

Also, if your sale of vacant land meets all these requirements, you must treat that sale and the sale of your home as a single transaction for tax purposes, meaning that you may apply the exclusion only once.

So what I am asking since I received Two 1099S forms one for the land and one for the house do I just add the amounts together and enter them as one?  

Example:  I received 50,000 for the home and 10,000 for the land each amount shown on two separate 1099S forms and I meet the requirements above. So do I then put in 60,000 under the Home Sales Summary field in Turbo Tax? 

[MarilynG1]

If you received two 1099-S forms, enter each of them separately.  The IRS has copies and they do 'document matching'.  You will still be able to qualify for the exclusion.