Okay, here's my situation. I had a house several years ago and then sold it. I took the 121 exclusion. Then I moved, bought a piece of property and then later built a house on it. However, before I ever moved into the house I got another job offer and moved again. Luckily, right after a put the house on the market someone bought it. I know I'm not eligible for the regular 121 exclusion again and I don't think I'm eligible for the exception because even though I owned the house I never actually "used" it. Now for the big quesiton. The house I built was a capital asset. The land was not. But since I built the house on the land then sold it. . . is it ordinary income or capital??? Help!!
Here is my take, but the best response anyone can give you is to consult a licensed tax professional in your area.
I would divide the sale into two parts. The first is the sale of a long term capital asset -- the land. The second is the sale of a short term capital asset -- the house. Take a long term capital gain tax treatment on the land sale, and a short term capital gain tax treatment on the house.
I recommend paying them on time!
seriosuly what kind of tax help do you want?
Okay, here's my situation. I had a house several years ago and then sold it. I took the 121 exclusion. Then I moved, bought a piece of property and then later built a house on it. However, before I ever moved into the house I got another job offer and moved again. Luckily, right after a put the house on the market someone bought it. I know I'm not eligible for the regular 121 exclusion again and I don't think I'm eligible for the exception because even though I owned the house I never actually "used" it. Now for the big quesiton. The house I built was a capital asset. The land was not. But since I built the house on the land then sold it. . . is it ordinary income or capital??? Help!!
Why isn't the land a capital asset??
Here is my take, but the best response anyone can give you is to consult a licensed tax professional in your area.
I would divide the sale into two parts. The first is the sale of a long term capital asset -- the land. The second is the sale of a short term capital asset -- the house. Take a long term capital gain tax treatment on the land sale, and a short term capital gain tax treatment on the house.