How is the sale of real estate treated for tax purposes when the land has been subdivided and only a portion of the subdivided property is sold in a subsequent sale?
Assuming that the seller is not in the business of selling property, there is capital gain treatment equal to the difference between the selling price and the tax basis in the land that was sold. The tax basis is calculated by dividing up the total basis of the property between the subdivided portions of the property. This is usually based on each parcels proportionate share of the fair market value. Note that taxpayers will not be treated as in the business of selling property “solely” because they have sold a parcel of land.
Related Questions
- How is the sale of real estate treated for tax purposes when the land has been subdivided and only a portion of the subdivided property is sold in a subsequent sale?
- What if the property is not sold in the Tax Foreclosure/Constable Sale? Dose the price change?
- How Much Money does the Owner have to Pay to Redeem the Property Sold At a Tax Sale?
