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ColoMtnMan
New Member

How do I report the sale of a qualifying adjacent vacant lot when the sale of the lot took place in 2016 and the sale of the primacy residence took place in 2015?

The 2015 primary residence sale included some depreciation recapture and was reported on our 2015 return. The lot was adjacent and part of our primary residence. It sold within the two years after and sold for $50,000. The total was well under our $500,000 exclusion for joint filing. I just(?) need the technical steps to do the 2016 return.

1 Best answer

Accepted Solutions
MichaelL1
Level 15

How do I report the sale of a qualifying adjacent vacant lot when the sale of the lot took place in 2016 and the sale of the primacy residence took place in 2015?

EDITED 3-21-2017

"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." Per Pub 523. 

The gain would be excluded from income as it should be treated as Sale of Personal Residence, just like it was part of the original sale.  So report the adjacent lot sale under the Less Common Income section as a Personal Residence sale for 2016.  Keep the section from Pub 523 with the tax file. 

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.

View solution in original post

2 Replies
MichaelL1
Level 15

How do I report the sale of a qualifying adjacent vacant lot when the sale of the lot took place in 2016 and the sale of the primacy residence took place in 2015?

EDITED 3-21-2017

"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." Per Pub 523. 

The gain would be excluded from income as it should be treated as Sale of Personal Residence, just like it was part of the original sale.  So report the adjacent lot sale under the Less Common Income section as a Personal Residence sale for 2016.  Keep the section from Pub 523 with the tax file. 

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.

View solution in original post

ColoMtnMan
New Member

How do I report the sale of a qualifying adjacent vacant lot when the sale of the lot took place in 2016 and the sale of the primacy residence took place in 2015?

The 2015 sale was of my primary residence which qualified for capital gains exclusion. Publication 523 says I can include the sale of the vacant land next to the residence under qualifying conditions which are met. Pub 523 says it has to be treated as one sale. The question is how to do it in TurboTax since the primary residence sale was already reported on my 2015 return and the land sale occurred in 2016 - within the two years before or after allowed for cap gains exclusion.
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