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Vacant Land Sale

Hello, 

Curious the taxable ramifications when a client has held vacant land for twenty years, and finally sells it? Is this simply a long-term capital gain situation? And can all those years of property taxes be considered when calculating cost basis? 

Thank you,

Dawn 

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6 Comments 6
IRonMaN
Level 15

Capital gains.  For any of those 20 years were property taxes previously deducted?


Slava Ukraini!
BobKamman
Level 15

The question isn't whether the taxes were deducted, but whether an election to capitalize them was filed for any of those years.  

George4Tacks
Level 15

I know that this is not even remotely related to this question, but I thought it was remotely related to this question and I am weird, so here goes.

Mallard Fillmore 2024-10-04.jpg


Answers are easy. Questions are hard!
Jim-from-Ohio
Level 11

Can we then deduct unrealized losses?

Highly doubt taxes were capitalized. However, the couple are very detailed and likely could go back through twenty years of taxes to determine if property taxes had been itemized and/or claimed on their State taxes. Is there a way for the software to document that? 

Happy Friday. 

 

p.s. Definitely sharing the comic relief with a certain someone. 😉 

abctax55
Level 15

"..... whether an election to capitalize them was filed for any of those years. "

Don't overlook @BobKamman  's comment, even if your clients can determine whether deducted or not in the prior years.

HumanKind... Be Both