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Real property basis when subdivided

My home was purchased together with a separate, adjoining lot, which I intend to sell. To date , this has been financed together with my the lot which my home sits, and was purchased at one time from a the same previous owner.

1 If I sell the lot, before I sell the house, my undertanding is that it does not qualify for exemption from capital gains for principle residence since we are not selling the residence. in this case is it treated as investment property? If so, how do I establish its basis? (it was purchased on one deed with one sales price together with the house. 2 if i sell the house, and keep the lot for later sale or to develop and live in, can i step the basis up to reflect the current value when it becomes characterized as investment property?
Reply to
taxcclueless
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When you bought the property, part of the purchase price is allocable to the structure and [the other] part to the land. Unless you can show that the land portion you're keeping is worth more than the portion you're selling, simply divide the land allocation by the ratio of acreage.

Note: If these were separate lots, with titles legally recorded separately, there may already be a separate amount identified in property ownership records as recorded with your county's government. If so, that's your answer.

Reply to
D. Stussy

If you sell both lots reasonably close in time and if you made personal use of the empty, adjoining lot (extended lawn; natural area for watching l'il wild critters; parking when you had big house parties; etc.; etc) then the entire gain could qualify for the primary residence exclusion.

No.

Reply to
Bill Brown

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