Selling a Primary Residence and Later Building a New Primary Residence on Land Subdivided from the First Residence

Forum|Forum|3 years ago
April 6, 2023
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I believe I understand the rules pertaining to selling a primary residence and a piece of land subdivided from a primary residence. My question is this: What if I buy a large piece of land, build a primary residence on it, live in it 2+ years then build my next primary residence on the same land, subdivide the two, then sell the first residence with its land? Can I exclude the gain on the first residence, and then later (after another 2+ years of residence) sell the second residence and exclude its gain?

Best answer by PattiF

Yes, you are able to exclude the gain for a primary residence that you lived in for two years that was built on land that contained a different primary residence. This exclusion is based on the personal home and not land.

Before the law was changed in 1997, only one exclusion from gain was allowed in a lifetime.

@Rubendad

RobertB4444

Yes. You can exclude the gain on your primary residence every two years.

@Rubendad

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RubendadAuthor

I understand the two-year rule. My question is really about whether any problem arises by using the same piece of land to build two primary residence in sequence.