Are you selling half of the lot? When you bought the home was the house on it? Your cost basis for the property would only apply to the portion of the property you are selling minus the house.
If you bought the house and land and you are just selling land, then you would need to get the cost of the land without the house then and now. So if in 2000 you paid $200,000 for land and property and on your property taxes the land was valued at $20,000 and your improvements were valued at $180,000, then only 10% of the value was in the property. If you sold half of the land, then you can claim $10,000 as the cost of the property.
Are you selling the fenced area to them? If not, this is an improvement that would not be part of the cost of the land. So you would not add include it in the cost.
The land clearing would be part of the cost of the land.
You will report it as an installment sale without claiming any interest. If the sale and all payments are being made in 2024, you would simply treat it as a sale. If the initial payments were made in 2023, then you would include in your income the amount that was received in 2023 on the 2023 return and then what you receive in 24 in your 2024 return.
To enter this sale in TurboTax you will select the following:
- Federal
- Income and Wages
- Installment Sales Under Miscellaneous Income
- Walk through and enter all of the information for the entire property
- Enter the payments received in 2023 and enter $0 for interest received and hit continue.
- TurboTax will do the calculations from there
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