How can you account for the cost of a lot when you sell a house you built? Cost basis does not include cost of the land. IRS form 6252 establishes your profit by taking

[dick_gilbert]

the sales price which includes land and subtracting the cost of building the house without land.  This inflates the actual profit by the value of the land.  How should this be reported?

[MinhT]

You should add the cost of the land to the cost basis of the building to report as total cost basis.