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J
janine
Level 5
April 17, 2021
Question

how to avoid paying tax on the sale of a vacant lot

  • April 17, 2021
  • 9 replies
  • 41 views

taxpayer owns a principal residence and two vacant lots.  Now retired, taxpayer want to sell one of the two lots to build a vacation home on one of the lots he owns. 

Is there a way to avoid paying the taxes on the sale of one lot, which funds will be used for the building of the vacation home on the other lot?

This topic has been closed for replies.

9 replies

T
TaxGuyBill
April 17, 2021

Sure.  The taxpayer can sell the lot for less than his Basis in the lot.   😁

If the sold "lot" and/or the "vacation home" is for personal purposes, any gain will be taxable.

    J
    janineAuthor
    Level 5
    April 17, 2021

    Thanks for your quick reply.  Yes it is for personal use.  I have been reading the Like kind exchange 1031, but I really do not understand it.  That is why I reached out to the community.

     

    abctax55
    abctax55
    Level 15
    April 17, 2021

    Read a bit more & you will see that § 1031's don't work for personal use property.

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