I asked a similar question a couple of years ago, the only
difference was I had lived in my house for six years and
wanted to sell one acre of the original 3 1/2 acres. The
answer I got was that you had to pay capital gains on the
"profit" on the land if you didn't sell the whole thing in
two years. You had to calculate the value of the land when
you bought it and then subtract that from the sale price.

Here's a related question. In the above post (or in my case)
if you used the procedes from a partial land sale to pay
down the original mortgage or to make improvements to your
house on the remaining propoerty (new siding for example)
does this lower the amount that you have to pay capital
gains on?

BTW, what is the capital gains tax rate for something like
this?

delaluz

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

J wrote:

- quote -

I see no reason that they would not be subject to capital
gains tax on the sale of the unimproved parcel. Section 121
exclusion does not apply, as this was not their principal
residence. Maximum tax rate is 15%, whether they wait two
years or not.

- quote -

Waiting two years to sell the unimproved parcel doesn't
change anything. Still taxable.

- quote -

Do they plan to sell the house and acreage at that time?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

We are looking at a piece of property that is being partitioned from a
larger piece of property. 20 acres and a house down to a 10 acre parcel
with the house and an unimproved 10 acre parcel. The current owners
are a couple that we know and are helping them with the process. A
relative of theirs told them that they might have to pay capital gains
tax on the sale of their property. They bought the house and 20 acres
in October of 2004. They are wanting to make the 20 acres into two 10
acre parcels. They will keep the original house and 10 acres. Will they
have to pay capital gains tax on the 10 acres that they are selling
off? If so, if they wait for 24 months from the time they bought the
property originally, will they still have to pay the capital gains tax?
They have lived in the home continuously since October 2004 and plan to
be in it at least through the 24 months. Any help any of you can give
would be greatly appreciated.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >