Author Topic: Capital Loss - Land adjacent to principal residence  (Read 723 times)

COlady

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Capital Loss - Land adjacent to principal residence
« on: August 19, 2019, 10:49:26 AM »
I'm trying to determine if I can take a capital loss for sale of land adjacent to my principal residence.

I found information stating that if I sell land adjacent to my home with my home that the gain on sale would be subject to the $250k/$500k gain exclusion. Conversely, similar to a sale of a principal residence, any loss would be considered a personal non-deductible loss.  IRS pub 523 states that a gain would be subject to exclusion of following is met:

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.

I'd like to sell the land now at a loss and then sell the home in 2 or so years also at a loss. Do you think I can justify a deductible capital loss on the land sale?

Laura Ingalls

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Re: Capital Loss - Land adjacent to principal residence
« Reply #1 on: October 09, 2019, 06:43:46 PM »
How much land?  It is germane because at some point a parcel is too large to be considered part of your primary residence.