Land Sale in MA

[KimSR]

We sold a piece of land in Massachusetts (owned for 29 years).  I think I understand that we will not have to pay capital gains based on our 2022 income level.  As far as what we can use to claim for improvements:

1) We had 2 sheds built on the land

2) We cleared the land ourselves (how would we determine cost if deductible)

3) Do we net off what we paid for it in 1993 (bought at an auction) or do should we find out the assessed value at that time?

Anything else we need to do?

Thank you!

[melj1]

The basis of the land you sold in MA is the original cost that you paid for the land in 1993 and to that you add any improvements, such as the sheds. The only costs that can be added to the basis related to the clearing of the land is any out of pocket expenses you incurred. Nothing can be added related to your labor. You may be able to capitalize interest and taxes under Section 266: Section 266 allows taxpayers to capitalize taxes, interest, and carrying charges that would otherwise be lost or limited under other provisions in the tax code. The election is made on a year-by-year basis and can be for any or all of those three categories of expenses.