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Posted by D. Stussy on September 20, 2008, 8:43 pm
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> My home was purchased together with a separate, adjoining lot, which I
> intend to sell. To date , this has been financed together with my the
> lot which my home sits, and was purchased at one time from a the same
> previous owner.
> 1
> If I sell the lot, before I sell the house, my undertanding is that it
> does not qualify for exemption from capital gains for principle
> residence since we are not selling the residence.
> in this case is it treated as investment property?
> If so, how do I establish its basis? (it was purchased on one deed
> with one sales price together with the house.
> 2
> if i sell the house, and keep the lot for later sale or to develop and
> live in, can i step the basis up to reflect the current value when it
> becomes characterized as investment property?
When you bought the property, part of the purchase price is allocable to the
structure and [the other] part to the land. Unless you can show that the
land portion you're keeping is worth more than the portion you're selling,
simply divide the land allocation by the ratio of acreage.
Note: If these were separate lots, with titles legally recorded separately,
there may already be a separate amount identified in property ownership
records as recorded with your county's government. If so, that's your
answer.
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