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divide home and sell, gain exclusion?

Forum|Forum|5 years ago
December 21, 2020
1 reply
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Hi All,

I have a client who bought several condo units and combined them to make one big home. It is their primary residence. They decided to divide one lot and sell it. They meet all criteria for home sale gain exclusion, but can they take it in this case? They used the lot as part of their primary residence, but they will remain at the same (now smaller) address. Do we think they can exclude the gain?

Thanks!

Lacerte Tax

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T

Terry53029

Intuit Community Champion

To qualify for the 121 exclusion you have to sell your main home at a gain. Selling lots does not count.

If building was attached to land, maybe:

(3) Vacant land -

(i) In general. The sale or exchange of vacant land is not a sale or exchange of the taxpayer's principal residence unless -

(A) The vacant land is adjacent to land containing the dwelling unit of the taxpayer's principal residence;

(B) The taxpayer owned and used the vacant land as part of the taxpayer's principal residence;

(C) The taxpayer sells or exchanges the dwelling unit in a sale or exchange that meets the requirements of section 121 within 2 years before or 2 years after the date of the sale or exchange of the vacant land; and