sale of subdivided lots from principal residence sale how to handle gain exclusion

[farmer50]

Lived in principal residence for 2 years then subdivided into 3 lots (principal residence on one lot) .  The other 2 lots were vacant land.  Sold principal residence last year with net loss of $227K over what was paid.   Sold two vacant lots this year with total gain of $109K after what was paid originally.  Have 1099S for all 3 sales and last year did the principal residence sale on tax return but no gain just a loss.  How would I handle the 2 lot sale 1099s on this years tax return in order to exclude any gain?

[tagteam]

See https://www.irs.gov/publications/p523#en_US_2023_publink100073092

[tagteam]

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.

Note.

However, if you move your home from the land on which it stood (meaning you relocate the actual physical structure), then that land no longer counts as part of your home. For example, if you move a mobile home to a new lot and sell the old lot, then you can’t treat the sale of the old lot as the sale of your home.