Capital gains on sale of land

[bryanp66]

I sold 41 acres of land and have to pay capital gains. This land is personal use and not a primary residence or business property. Can i deduct capital improvements I have made to the land?

[DMarkM1]

When you say improvements if that means the land was being prepared for it's intended purpose then the cost of the land improvement is added to the cost of the land increasing basis and thus reducing gain.  This would include items like clearing and leveling the land.

If you added functionality to the land then those items are separate items and the cost is to be depreciated once put into service to generate income.  When the land is sold the sale price is allocated to each of the items of improvement as well as to the land itself.  Items such as drainage and irrigation systems, fencing, landscaping, and parking lots and walkways would fall into this category.  Essentially, the undepreciated cost of the items is basis so reduces gain.  

[bryanp66]

The improvements made were a road into the property, electric installed onto the property, a 40x48 post frame building and associated excavating costs for the building site

[DaveF1006]

Yes, you can add the costs of these improvements of the land sale. To add these, you will add these improvements to the basis of your land which will reduce the amount of capital gain on the sale.

[bryanp66]

Ok, to make sure I am clear on this. As I am working on this under income, I put the gross proceeds  figure listed on my 1099=S down under "proceeds from sales", the cost of the capital improvements get added to the purchase cost under "cost basis from sales", and the commission paid to the real estate agent is added under "adjustments". Correct?

[RobertB4444]

Correct