Capital Gains not on primary home

[sjaaheim4]

We are selling some land and will be splitting the capital gain for 2 years. Can I also split the amounts for capital improvements for 2 years?

[Anonymous]

Hello sjaaheim4,

Thank you for joining us today. As to your question, it sounds like you may be doing an installment sale where the buyer is paying you over a two year period. If that is the case, you will need to determine the total capital gain for the sale in the year it was sold and then only recognize the amounts you actually received in the year it is received.

For example, if you sold the land for $100k and your adjusted cost basis (includes improvements) is $50k, your total capital gain is $50k. However, if you only receive $25k the first year and $25k the second year, you would only have capital gains tax of $25k for each year. If there is any interest included in the agreement, you will need to report that as ordinary income as well.

This IRS article should be of help.

I hope that helps.