Can I include expenses I paid for improving land somewhere in the other income portion so it goes against the total profit? I sold it and buyer purchased it outright.

[lawrencekane2]

I sold the bare land for 95k more than i bought it 3 yrs ago, and that's what I'm being taxed on. However, my actual gains after improvements, like putting in a well, are more like 30k. Is there a way to to only be taxed on actual profit?

[DianeW777 · Accepted solution]

Yes, you would include the land improvements such as your well installation as part of the cost of the property.  Add that cost to your original cost basis when entering the sale and the gain will reflect the difference in gain.  

• Where do I enter investment sales?

This answer assumes this is investment property and was not part of a business property such as residential rental or part of a business.

Land is considered investment property if it is not part of a home sale.  Land sales are reported by using the following instruction.

1. Federal tab, then Wages & Income, then scroll down to Investment Income and select Stocks, Mutual Funds, Bonds, Other. 
2. Respond "yes" to Did you sell any investments?  You'll then be asked Did you get a 1099-B or brokerage statement? answer "no."
3. Enter one sale at a time
4. Enter Land Sale Information Be aware of the tiny box that says "Reported sales price did not deduct all fees of selling expenses," as it must be checked if applicable to you.
5. Continue to follow the prompts to complete your sale
6. See the image below for assistance.