Sale of vacant lot

[vpujols]

Hello experts,

I've been reading around but didn't find what I am looking for. I use the TT Deluxe which I buy from Costco.

I have a vacant lot in another state (FL) which I'm about to sell. Bought it for $20k about 12 years ago and been paying taxes for that time (I think about $4k).

The lot will be sold for $23k which would seem like a $3k gain, but again I will lose money since I paid over $23k if we count the taxes. The seller will be paying all closing costs.

So will this be a gain or a loss?

Also, the lot is on my name and wife's name (but we're been separated and filling our taxes separately).

So, who needs to report the sale of the vacant lot?

Thanks much for the info.

[Mike9241]

you should have been deducting the taxes paid each year.   we can't answer legal questions that don't pertain to tax laws so it would be prudent to consult a lawyer in Florida for any questions you have about the lot. 

[vpujols]

I remember deducting the taxes maybe a couple times. So for this, you're saying I need to forget how much I paid in taxes and basically have the $3k as a gain? I've never done this and not sure if TT software will ask you how much I paid for it and how much I am selling it for?

The vacant lot is in FL but we live and file taxes in CT, so my question I hope is generic to tax filling when I ask who needs to put the sale on the taxes, I think?

[DawnC]

As Mike9241 stated above, the property taxes you paid should have been deducted in each year that you paid them.  When you sell a capital asset (lot), the difference between its cost basis and the selling price results in a capital gain or loss.

Yes, TurboTax will ask about the selling price and your cost basis.  CT is not a community property state, so gains on assets that are jointly held can be allocated any way you like, but gains on assets held in one name only must be reported on the owner's tax return.  

Related Information:

• Where do I enter a capital gain or loss?
• How is a capital gain or loss calculated?
• What is the definition of cost basis?
• What is a capital loss carryover?

[vpujols]

"gains on assets that are jointly held can be allocated any way you like".

Question about this, when you say allocated? You mean reported by either or?

Thanks again for the helpful answers..!!

[AmyC]

If you live in a community property state, you will each account for half of the sale in your taxes. If you don't, decide among yourselves and look at the 1099-S form, whose number is there? Somebody's SSN is on the sales form already.

Yes, it looks like a $3,000 gain but don't forget to add your expenses of purchase and any improvements or assessments.

[vpujols]

Thanks again.

The sale is not done yet, it is still going through some closing steps. So maybe I think I should not get ahead of myself and leave this for next year's filling since this is happening this year.

One more question, the sale will be for $23k but out of this I will pay around $1,500 in realtor sales commission. Can this expense be claimed somewhere in TT?

[Irene2805]

Rather than claim the expenses of selling, you should enter the NET sales price in TurboTax. 

A land sale is considered a sale of an investment.  To report this in TurboTax, please follow these steps:

1. Click on Federal > Wages & Income
2. In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.  If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far.  Click on the Add More Sales link. 
3. If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 20XX?  Click the Yes box.
4. Answer No on the screen, Did you get a 1099-B or brokerage statement…”
5. On the screen, Choose the type of investment you sold, mark the button for Land and click Continue. 
6. On the next screen, enter the land sale information.  Be sure to enter the NET proceeds and mark whether income taxes were withheld or not. 
7. Continue through the screens, entering the requested information.

[Critter-3]

Do not just report the NET sales price as that will not line up with the 1099-S you get from the closing company thus the IRS will send you a letter later.    Instead the purchase price + cost to buy + cost to sell + improvements or capitalized expenses are totaled and that becomes your cost basis.  

[vpujols]

"purchase price + cost to buy + cost to sell + improvements or capitalized expenses are totaled and that becomes your cost basis. "

purchase price = $20k total (previous owner paid closing fees)

sell price = $23k

improvements = 0

realtor sale fees = $1,500

Total $ coming back from sales = $21,500

In general, since I am paying a realtor a commission, my total net coming to my bank will be $21,500,

I assume the cost to sell would be the $1,500 realtor commission.

[ErnieS0]

Yes. The realtor commission would be a sales expense, along with any other miscellaneous sales charges including title fees, transfer or excise taxes, escrow fees and recording fees (if applicable).

[Critter-3]

You will report the $23K as the sales price and the $21,500 ($20K + $1500) as cost basis netting a capital gain of $1500.  What you "walk away with" is immaterial on an income tax return. 

[David 9]

Sold vacant lots in FL , Paid taxes, blacktop roads, owned many years (15) , closing costs paid by buyer. Where is this reported and/or what forms are required?

[ToddL99]

Report the sale of vacant land in the Stocks, Mutual Funds, Bonds and Other interview of Investment Income. Vacant land" is an "Other" type of investment. When the program asks if you received a Form 1099-B, select "No". Completing the interview will generate Form 8949 and Schedule D.

Do not forget to include the cost of road improvements ("black tops") in the cost basis of the property. Property taxes are not part of the cost basis

See Where do I enter the sale of a second home, an inherited home, or land on my 2019 taxes? for instructions on how to access this interview in either online or desktop versions of the program. 

For the online program, here is a sample of the opening interview screen for "Land":

[bigredfro73]

All online help states something to the effect of:

On the screen, Choose the type of investment you sold, mark the button for Land and click Continue.

or

Click the radio button for Land.....

My version of Delux TT does NOT give this option.  I cannot find a plcae to choose Land as the type of investment I sold.  I checked and my software is updated.

Any assistance would be appreciated. Thanks