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by Anonymous on October 17th, 2007

Anonymous

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I own the empty lot next to my house and I want to sell it. I did not pay anything extra for it because it was included in the purchase of my house. I have owned both properties for 5 years and I wanted to know what are my options regarding capital gains.

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Answers. 1 helpful answer below.

  • by ccsolheim on October 29th, 2007

    ccsolheim

    If you are planning on reinvesting the sale proceeds of that lot into another piece of investment property, you should look into doing a 1031 exchange. Section 1031 of the IRS tax code allowes you to defer the capital gains on the sale of a piece of investment, income, or business property when the proceeds from that sale are reinvested into purchasing another piece of investment, income, or business property of equal or greater net sales price. The IRS requires that you use a qualified third party to facilitate this exchange - called a Qualified Intermediary. Also, there are two important deadlines invloved - you have 45 days after the closing of the sell to identify up to 3 properties that you may purchase. You have 180 days from the date of the closing of the lot sale to actually purchase one or more of the identified properties. http://www.1031taxinfo.com has great information on 1031 exchanges if you think you are interested.

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