This doesn't necessarily apply to the OPs situation unless he sells his primary residence in the next two years.
Vacant Land Next to Home
If you have vacant land adjacent to the land on which your home sits, you can only claim the sale of that land 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 happened within 2 years of each other.
•Both sales either meet the eligibility test or qualify for partial tax benefits as described earlier.
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.
How you are supposed to treat the sale of the land and the sale of the home as a single transaction for tax purposes when they can occur in different years is beyond me.
What is really going to suck is if you don't have plans to sell your primary residence in the next two years and you have to pay capital gains tax on something that you could have avoided all together by just waiting to sell it along with the primary residence.
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