Land Sale

[bojo115]

I sold 4 acres of vacant land in Florida on 09/22/2021.  I live in Alabama.  First, do I have to file a state return in Florida or just my regular return in Alabama.  Second, I had the land for over 40 years and took the standard deduction on my taxes all but three years.  Concerning my expenses can I deduct the 40 years of taxes I paid? And can I include in expenses the $850.00 I paid to just have the land surveyed, not for this sale, but to keep the boundry lines clearly identified.    

[Texas Roger]

There is no state income tax in Florida so you do not file a Florida state tax return. You can only deduct real estate taxes in the year they are paid so any prior year real estate taxes cannot be claimed on the current year tax return. You can add closing costs such as appraisal and realtor fees to the basis of the property you sold in determining the capital gains. 

[bojo115]

Thank you for your reply.  I'm still not sure about including the cost of having the land surveyed, $850.00 about 20 years after I purchased the land.  I had it done just to make sure I knew where the land surveyed markers were located, no sale involved at that time.

[Carl]

I'm still not sure about including the cost of having the land surveyed, $850.00 about 20 years after I purchased the land.

If the lender required a survey, then it's added to the cost basis of the property. Generally the buyer pays for the survey and is therefore the one to claim it on their tax return. If the lender did not require it from "you", then it's typically not deductible and doesn't add to the cost basis.

Overall, you'll be lucky if $850 makes a worthwhile difference on your tax return anyway.

[bojo115]

Thank you for your quick reply.  When I sold the land in 2021 the buyer did pay for the survey.  My question relates to when I had the land surveyed in 2002 so I could identify the land survey points as the landowner next to my property had installed a fence and I knew if I did not bring the correct property survey points to his attention within 7 years he could claim his fence as the correct property lines.  We resolved the matter and he had to move one of his fence post to the correct point.  I thought I might be allowed to claim the cost of the survey as an expense since I had not claimed the cost of the survey on my 2002 taxes.  Thanks again for your advice.

[Hal_Al]

You cannot now deduct the cost of the survey done 20 years ago.    It is not an "improvement". So, the cost of the survey can also not be added to your cost basis.  You cannot now deduct the 40 years of taxes you paid.

If you considered this property to be investment property, you could have deducted  your investment expenses, including real estate taxes and the survey cost,  each and every year; but only as itemized deductions*.  There was one other option: you could have  "capitalized" your investment expenses, each year. But, that required you to file a statement, each and every year, with your tax return, documenting your election to do so.   You cannot now capitalize those costs, "after the fact", in the year of the sale. 

There is nothing deductible the year of the sale, except your closing costs.  Those are added to your cost basis. 

*Property tax would have been fully deductible.  Mortgage interest would have only been deductible to the extent of any investment income you had.  Only other deductible expenses (e.g. the survey) were subject to the 2% of AGI threshold.