Can Turbotax adjust my capital gain to zero on sale of qualifying adjacent land that was sold 1 year after the sale of the main home? Or do I have to override Form 8949?

[wacaut]

I received a 1099-S on the sale of the land so I need to report it on Form 8949.  The Turbo tax worksheet for 8949 does not have an option for qualifying land adjacent to main home that qualifies to be included in the gain exclusion of the main home.

Pub 523 informs that the sale of vacant land next to home can be included as part of the sale of your home if:

1. it was used as part of your home - it was

2. sale occurred within 2 years of each other - it did

3. both sales meet Eligibility test - they do

So the combined gain on both sales falls under the $500,000 exclusion.

If I override Form 8949 and adjust the capital gain to zero (code H) I will not be able to electronically file so I am wondering if there is a way to report this through the Turbotax program

[KrisD · Accepted solution]

If you are using Form 8949, you are reporting the sale as a sale of investment property. This is not the correct way to report it, you should enter it as the sale of your main home. 

Enter the 1099-S under "Sale of your main Home" (NOT sale of land) and answer the questions as if this was the sale of your main home. Do not report the sale of the main building  that was 2 years ago. The program will not tax it, which is correct. Your answers are used on a worksheet, but not on any tax forms. 

It will allow you to efile. 

[camille145]

This reply did not help.  I sold adjacent land next to main home at the same time as the main home.  If I put in the cost basis of the land sale, TurboTax calls this a taxable gain.  I got a 1099S so I have to report it, but how do I exclude the gain on this sale?

[Hal_Al]

@camille145 - combine the two sales and enter as one sale, the sale of your principal residence.