sold a separate parcel of land behind my house last year, planning to sell my house and the land it sits on, this year

Forum|Forum|3 years ago
February 1, 2023
2 replies
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In 2014, we bought the parcel of land behind our home and used the land to grow fruit trees and our kids to ride around on their ride-ons (i.e., we "used" the land). In 2022, I sold the same parcel land to my neighbor for a profit, but I am planning to sell my house in 2023. Am I okay to not claim the capital gains on the profit if I sell my house this year?

MinhT1

If you have lived in the house you plan to sell in 2023 for more than 2 years in the last 5 years before you sell it, you are eligible for the capital gain exclusion of $250,000 ($500,000 if you file jointly).

If the capital gain is below this threshold, you do not have to report the sale on your tax return, except if you receive a form 1099-S in which case you have to report the sale but the capital gain will be excluded from taxation.

Please read this IRS document for more information.

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Carl11_2

Employee

Did you take the "2 of last 5" capital gains tax exclusion on the land you sold in 2022, or any part of it? My response assumes you did not.

Typically, if your gain is less than $250K ($500K if filing MFJ) you don't need to report the sale;provided of course you qualify for the exclusion. However, if you receive a 1099-S reporting any gains to you on the sale, you are required to report the sale no matter what.