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02-25-2017, 11:28 PM
 Junior Member Join Date: Feb 2017 Posts: 1
What is my property basis?

9/15/2015 purchased two lots in a neighborhood side by side for 156K. Replatted the lots taking Lot A down to .7 from 1.03 acres and moving Lot B to 1.66 from 1.3 acres. Sold lot A for 60K on 9/13/2016. What is my tax basis for lot A? Can I split them down the middle and say I lost 18K on my taxes. Lots on the street have sold for 55-70 in 0.7 acre size but these are the premium lots in the neighborhood wooded and on the only culdesac. Confidently feel like I lost some cash in the deal but dont know if the IRS cares. Any thoughts from an expert would be much appreciated.

02-26-2017, 02:17 AM
 Moderator Join Date: Oct 2010 Posts: 5,239
9/15/2015 purchased two lots in a neighborhood side by side for 156K. Replatted the lots taking Lot A down to .7 from 1.03 acres and moving Lot B to 1.66 from 1.3 acres. Sold lot A for 60K on 9/13/2016. What is my tax basis for lot A?=====> When you buy a tract of land and subdivide it, you must determine the basis of each lot. To determine the basis of an individual lot, you need to multiply the total cost of the tract by a fraction. The numerator is the FMV of the lot and the denominator is the FMV of the entire tract.This is necessary because you must figure the gain / loss on the sale of each individual lot. As a result, you do not recover the entire cost in the tract until you have sold all of the lots.

Can I split them down the middle and say I lost 18K on my taxes. Lots on the street have sold for 55-70 in 0.7 acre size but these are the premium lots in the neighborhood wooded and on the only culdesac. Confidently feel like I lost some cash in the deal but dont know if the IRS cares.========>As mentioned above;you may simply divide the land allocation by the ratio of acreage. I am not quite sure how you palt it; however, you may plat the property once you and the surveyor have worked out a plan of development showing the entire property subdivided into lots and have the plat filed in the county tax office. This also informs the tax office that the property is being developed and will be changed from being taxed as acreage to individual lot assessments in the near future

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