How to report sold land

[utnursecrystal7]

I'm confused on the questions and the boxes to fill out

[Carl]

I'll be happy to help out here. But we need more information so I don't waste your time providing information that doesn't apply to your situation. Is this raw land with no building or other structures on it? Did you buy this as an investment? Is this land you sold part of a larger plot of which the sale only comprises part of that plot? Before the sale, was that land plot a part of your primary residence? Were you the only owner of this land? Or did you have less than 100% ownership of the land and it was sold by all the owners to someone else? Maybe it was owned by two of you, and you sold your interest in the land to the other owner? With this information, I can get you to the right section in the program to get your started.

[utnursecrystal7]

I acquired this property in 2013, my grandmother passed in 2008 and in 2013, my mom being the only heir, and I went to court and got property granted to her and we immediately how the property put in my name. It's just land, no structurescape, not lived on, not primary residence. We sold it in may of 2016 for 8000. The current value is 6840. I was the only owner. It was one small plot of land, no dividing and selling separately.

[utnursecrystal7]

I did click the learn more button, but still did not understand "Net Proceeds"

[utnursecrystal7]

Where do I find the FMV that far back

[Carl]

The sales price. Every penny of it. For the FMV, you may be able to check that at the county courthouse. When real property is transferred, it's done so with two valuations. The first one is the tax value, which is determined by the county property appraiser. They use that value to determine the property taxes.
The second one is the FMV (Fair Market Value) and that is generally done by a qualified and licensed property appraiser - not the county appraiser since they only establish a value for determining property taxes. In the case of raw land, the two values are usually close enough that they'll only list the county's appraised tax value.
Generally, the county's valuation is significantly lower than the FMV. If this is your case, then using that value would result in a higher taxable gain on your sale. What you can do is contact a real estate agent and ask for a CMV (Comparative Market Value) for land in your local area back dated to when your grandmother passed. Then you can use the CMV to establish your own FMV. You can expect to pay maybe $100  give or take for the CMV, but it could be worth it tax-wise. Only you can make that call. You'll also want to retain all paperwork associated with this for at least 7 years, in case you are ever questioned on this by the IRS. If you do it at a price the IRS consider's "fair", there's no reason you'd need it. But then, you can never be over prepared with the IRS.

[utnursecrystal7]

Ty so much. Can u explain "Net Proceeds" a bit more?  I did not understand it when I clicked the "Learn More" link

[Carl]

You're over thinking it. Net Proceeds is the total sale price. Period. Nothing more, nothing less. If I sold the land for $6000.00, then my net proceeds are $6000.00. It doesn't matter what I paid for the land, or what deductible expenses in incurred in the sales process. I still sold the land for $6000.00. Period.

[utnursecrystal7]

I sure was over thinking it and second guessing myself. Since originally that's what I put, ty again

[Carl]

One has to be careful, as much of the wording in the program is verbatim from the IRS publications. So take the program "literally" at face value. If one tries to "read between the lines" for information that is not there, it's likely they'll make mistakes that could be costly tax-wise, depending on the situation.

[seanald]

I have a similar situation with a few twists that I would like advice on.(using TurboTax premier) I purchased a house in 2001 on a large lot. I was the only owner. I split the lot into 2 taxable lots. I lived in the house until 2006 and then sold the house for a small gain. I kept the lot and it had a large shop on the lot but no utilities.(power, water or gas.) I didn't depreciate the building.  I used the shop for my rental properties and personal use. I sold the lot in 2016 however I was under contract with a developer but decided to cancel for a $5000 fee and sold the property to the homeowner that I had sold the house to originally. My questions are, what form/s would I use to report the sale? can I write off the $5000 cancellation fee?

[Carl]

Please post this as a NEW question. Otherwise, confusion is guaranteed to abound that could result in your incorrectly reporting things on your tax return. @seanald

[Carl]

This should be simple then. First, you need the cost basis of the property, which would be what you paid for it, at the time you acquired it. In your case, it was inherited. So you need to know the Fair Market Value (FMV) of the property on the day your grandmother passed. That's your cost-basis. The transfer of the property from your mom to you does not affect this (right [mention://32332929 @TaxGuyBill] ?)  You'll report the sale under the Personal Income tab. Scroll down to Investment Income and elect to start/update Stocks, Bonds, Mutual Funds, Other.
Did you sell any investments in 2016?  Select YES.
Did you get a 1099-B?  Select NO.
Type of Investment. Select LAND and continue.
I think you can take it from here. For "Net Proceeds" if you need that clarified, click the "Learn More" link next to that box.

[JnJ1]

What if we sold our land for $11,500, but only received 20% down, (which covered the realtors and fees and gave us a little cash) and agreed to monthly payments (over 24 months) on the remaining amount. We only received 2 payments in 2020. The people who purchased it have plans to pay the rest off in the next few months. We don’t want to pay gains on this full amount both in 2020 and 2021. . .

[JnJ1]

I failed to mention we paid $6,000 for this property in 2012.