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Old 03-11-2008, 06:42 PM
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
18,125 posts, read 33,599,337 times
Reputation: 16599


I have friends dealing with a health crisis which requires abundant cash needs. They have built a home and lived there 2+ years, and have additionally split the parcel for 3 additional lots.

From my initial understanding of the capital gains exclusion on primary residence;

your $500k married exemption could include the gains from land which originally included the parcel of the primary residence, thus if you made 200K gain on the primary home and $100k on each of 3 adjacent and originally adjoining acreage you could collect the whole $500k, and anything over would be taxed as LTCG. I know there have some changes subsequent to original implementation. I believe they plugged the hole that allowed you to sell off $500k parcels from your primary residence land every 2 yrs, in that you now must sell your primary residence itself, not just the 'lower 40'.

Any other interpretations? or directions to information (accountant, of course... but they are not too creative... ... needing to stay out of jail to do their job...) There is a lot of room for interpretations.

I was always fond of the "multiple birth" exemption, which allowed you the same benefit as moving 40 miles for employment, in that you don't have to satisfy the 2 yr holding, BUT... you cannot get more than $500k tax free in 2 yr period, regardless of excuses
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Old 03-12-2008, 01:35 AM
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
18,125 posts, read 33,599,337 times
Reputation: 16599
found this... Pub 523 (Sale of primary Residence)
""Vacant land. The sale of vacant land is not a sale of your main home unless:
• The vacant land is adjacent to land containing your home,
• You owned and used the vacant land as part of your main home,
• The sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and
• The other requirements for excluding gain from the sale of the vacant land have been satisfied.
If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. ""

Seems this these conditions should be able to be met, hopefully selling it within the +/- 2yr time frame, before the Dr's. collection agencies file a claim against it.
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Old 03-12-2008, 08:34 AM
Location: Forests of Maine
28,037 posts, read 44,094,760 times
Reputation: 15015
Sounds right to me.
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