Question

Real Estate loss or gain

Forum|Forum|4 years ago
April 10, 2022
2 replies
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In 2009 I purchased a home that included an adjacent 5-acre lot which we purchased together in one sale. In order to sell the home and lot I had to separate them. I sold the home in 2020 and the lot in 2021. Together I sold them at a loss for what I paid in 2009. Turbo tax is making me post the land (1099-s) as an investment even though I am losing money on the combined sale of the home and lot. Any thought on this or am I doing something wrong?

ColeenD3

Yes, you have to include the fact that you sold the property, but you can't take a personal loss.

M

Mike9241

REG 1.21-1(b) (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

(D) The requirements of section 121 have otherwise been met with respect to the vacant land.

B) is crucial. if it applies the loss is not deductible. but if it wasn't used as such, one could argue it was an investment property and the loss would be deductible.