Home and land sale

[Stewstill]

Hello,

In 2022 I sold my primary residence of 10 years for 177k profit.  Next to that home was land that I sold in 2023 for a profit of 161k that I also owned for 10 years.  These were both purchased together by me at the same time in 2012.  My question is a single file am I still eligible for the tax exemption up to 250k single file?  I have a 1099s to file this year and not sure how to get exemption for up to the 250k.  I do understand 177+161 is 338k-250=88k I'm at going to have to pay capital gains correct?

[KrisD15]

Yes, you can claim the exemption for the house and the adjacent land. 

According to the IRS 

"Vacant land next to home.

You can include the sale of vacant land adjacent to the land on which your home sits as part of a sale of your home if ALL of the following are true.

• You owned and used the vacant land as part of your home.
• The sale of the vacant land and the sale of your home occurred within 2 years of each other.
• Both sales either meet the Eligibility Test or qualify for partial tax benefits, as described earlier.

Also, if your sale of vacant land meets all these requirements, you must treat that sale and the sale of your home as a single transaction for tax purposes, meaning that you may apply the exclusion only once."

[Stewstill]

Thanks for responding. I'm having a difficult time getting this information into turbo tax correctly. Is there a form I can submit or where do I actually enter this information?

[KrisD15]

This is entered under 

Income

Less Common Income

Sale of Home

You'll have to answer the questions concerning the land as if it were your primary home and as if you did not have the sale in 2022.  TurboTax asks "Did you sell another main home after a certain date"

Select NO since this was not ANOTHER home, it is part of the SAME home. 

[Stewstill]

Hi thanks for responding.  I went that route and there is no where to enter last year's info and is treating this like a home sale with it's own exclusion.  Ideas?

[PatriciaV]

The IRS rules that KrisD15 quoted above indicate that both sales must be reported together for the calculation of ONE exemption amount. 

Did you report the sale of your residence last year? If so, it would have been under the exemption amount, had no tax effect and wasn't reported on your return. (Even if you didn't attempt to report it, it was non-taxable.) 

For that reason, you should report both sales combined on your current year return. Any amount over the exemption will be taxed at the capital gains rate.