When calculating the portion of the land's cost out of the entire purchase, in another user's post @Vanessa A referenced looking at the county assessor's values. The purchase of this home was in 1998, so to determine the original cost of the land portion wouldn't I look at how the county asssessor split the land value vs improvements value in the tax year 1998 when it was purchased? And not look at how the assessor split the value between land and improvements in the year I was paid for the easement? Here is how the county assessor split the land vs improvements in 1998 versus 2023:
1998 - $51K land & $89K improvements = $140K total appraised value
2023 - $269K land & $203K improvements = $499K total appraised value
$190,000 Purchase price in 1998
$51K / $140K = 36.43% land with 1998 assessor values
.3643 * 190,000 = $69,217 Land Cost Basis
$190,000 Purchase price in 1998
$296K / $499K = 59.32% land with 2023 assessor values
.5932 * 190,000 = $112,708 Land Cost Basis
As you can see, the land cost basis is VERY different depending on which year's assessed values are used.
The easement is 13.565% of our land. (4,390 sq ft (easement) / 32,362 sq ft (total land)
$9,389.29 (.13565 x $69,217) = Cost basis of land sold for the easement using 1998 assessed values
$15,288.84 (.13565 x $112,708) = Cost basis of land sold for the easement using 2023 assessed values
Again the figures are very different depending on which year's assessed values we use...1998 vs 2023.
The amount we were paid for the easement was $15,156 and reported to us on 1099-S.
IF I’m doing it correctly, here are the calculations on whether there is a gain using both 1998 and 2023 assessed values:
$ 9,389 Cost basis of land sold for the easement using 1998 assessed values
$15,156 Payment received for easement
($5,767) GAIN
$15,289 Cost basis of land sold for the easement using 2023 assessed values
$15,156 Payment received for easement
$ 133 Basis Remaining (NO GAIN)
I appreciate anyone chiming in...
Thanks so much!!
