divide and sell home, gain exclusion?

[jpkramer1]

Hi All,

I have a client who bought several condo units and combined them to make one big home. It is their primary residence.  They decided to divide one lot and sell it. They meet all criteria for home sale gain exclusion, but can they take it in this case? They used the lot as part of their primary residence, but they will remain at the same (now smaller) address. Do we think they can exclude the gain?

Thanks!

[rbynaker]

Is the "lot" just land or is it a dwelling unit?

If it's just land (I tend to think not based on the info you presented) and the client sells their dwelling unit within 2 years you can retroactively amend and exclude the gain on the sale of the previously attached land.  See 1.121-1(b)(3).

https://www.law.cornell.edu/cfr/text/26/1.121-1

Go through the examples and see if anything fits your situation.

Rick

[jpkramer1]

Nope, I know the rules on vacant land. These are condo units with walls knocked out to combine them. One was just severed from the main home and sold.

[qbteachmt]

This has been asked Twice, and is also being answered here:

https://proconnect.intuit.com/community/tax-talk/discussion/divide-home-and-sell-gain-exclusion/00/1...

It's better to have your topic only once, so that the volunteers can see who else is participating and giving you guidance.

[qbteachmt]

The word "lot" here is = the group that has been bundled together, as in a Lot Sale.