I purchased a vacant lot in 2013 for 45,000 and sold it for 51,000 in 2015. Paid over 6K in settlement fees but received 19K at sale. Are the 19,000 taxable?

[edwgc61]

Purchased a lot in 2014 for 45,000 (with 12,000 down payment).  After settlement fees (realtor, closing, taxes) final price was 47,066.  Sold the property in 2015 for 51,000 but incurred in 5,500 in settlement fees (realtor, closing, taxes) but received 19,000.  Are any of the 19,000 taxable?  Numerically I suffered a loss.

[SweetieJean]

You sold it in 2015? Did you claim it on your 2015 return?
Did you ever rent out the lot for anything?
Keep in mind that any mortgage payoff is irrelevent.

[TaxGuyBill · Accepted solution]

No, that is not taxable.

As you pointed out, you need to do the math for the Gain or Loss, which involves purchase price (including some purchase costs) and selling price (after some selling expenses).

I hesitate to definitively say if you have a Gain or Loss because you mentioned "taxes" as part of the settlement fees.  Real Estate taxes are not generally added to your Basis (cost) as they are usually deductible in the year you pay them (except for certain situations when you make a special election to add them to your Basis).

[Hal_Al]

The numbers are a little fuzzy. $47,066 net proceeds minus cost basis of $45,000 = net taxable gain of  $2066.

But 51,000 - 47,066 = $3934 in closing costs, not $5500 or "over 6K".

[TaxGuyBill]

I interpreted it as the Basis is $47,066 ($45,000 plus purchase costs) and the 'net' proceeds from the sale was $45,500 ($51,000 sales price minus $5500 in sales expenses).

[SweetieJean]

"Are any of the 19,000 taxable" The walkaway money is irrelevant, since any mortgage principal is irrelevant,