Portion of Primary residence lot subdivided and sold - is it capital gain?

[jrahn6]

I am trying to determine if the capital gain tax rate is applied when subdividing a lot that was part of my primary residence and selling it. Are there any other tax credits since it was contiguous land to my primary residence?

If it is capital gains, will be trying to offset with other investment losses.

[Anonymous_]

@Critter-3 ?

There is an exception for land attached to property used as a primary (main) residence.

[Critter-3 · Accepted solution]

This tax exclusion applies to the sale of your main home. This includes the building or buildings that constitute your home and the surrounding land you use as part of your home.

But what if you own vacant land surrounding your home that you sell separately from the home itself--—can it qualify for the exclusion?

The answer is "yes," provided that:

• the vacant land is adjacent to land containing your home
• the sale of the vacant land and the sale of your home occur within two years of each other
• you owned and used the vacant land as part of your main home, and
• your use of the vacant land satisfies the two-year ownership and use rule.

If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and one $250,000/$500,000 exclusion can be applied to any gain.

https://www.nolo.com/legal-encyclopedia/tax-exclusion-vacant-land-around-home.html

[jrahn6]

Thank you for this information!  The only other option I could find was the 1031 exchange, but we aren't looking to buy another property at this time.