Are considering the sale of your principal residence? You probably know that you will be able to exclude up to $250,000 of gain ($500,000 for most joint filers). IRS regulations may now allow you to apply this gain exclusion when you sell vacant land that is adjacent to your home.
Example: You own a house and 10 acres of property. The home is your principal residence. When it’s time to sell, you decide to divide the property. The house will be sold on a three-acre lot, and the other seven acres of land will be offered to a developer. If the land sale occurs within two years before or after you sell the house, you can exclude up to $250,000 ($500,000 if you file jointly) of the combined gain from both sales.
Charles P Myrick CPA , Washington DC tax preparation firm, provides accounting and bookkeeping services to clients throughout the area. Contact us to find our more about our tax planning and tax preparation services.
Note: Originally published 2014-07-17.