Claiming the Sale of Vacant Land on Your Federal Tax Returns

Apr 8
09:25

2010

Kristie Lorette

Kristie Lorette

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When vacant land is sold, the sale must be filed with the Internal Revenue Service. You must report the sale on your personal federal tax return if it...

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When vacant land is sold,Claiming the Sale of Vacant Land on Your Federal Tax Returns Articles the sale must be filed with the Internal Revenue Service. You must report the sale on your personal federal tax return if it meets certain criteria. These include whether the land is adjacent to your primary residence, if you owned or used the land as part of your primary residence and whether the sale of your primary residence and the vacant land occurs within two years of each other.Step 1Calculate the profit or loss by subtracting the selling expenses from the selling price and any outstanding mortgage balances or tax liens paid out of the proceeds of the sale. Determine whether it's a profit or loss and the exact amount.Step 2Report the gain, if there was one, on Schedule D of the 1040 federal return form. Use line 1 if it's a short-term debt, meaning that you owned the land for one year or less. Use line 8 if it's long-term, or you owned the land for more than one year.Step 3Report the loss, if that's the case, on Schedule D, lines 1 or 8. The loss is not tax-deductible, but you still have to report it.Step 4Fill in the information associated with Lines 1 or 8 in sublines a through e. Enter the amount of your gain or 0 (zero) on subline f, if it's a loss. File the form along with your personal income tax return.TipIf the vacant land was used for business purposes or rented for income, you may be required to file IRS Form 4797 to report the sale of the vacant land. Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}

About the Author

Kristie Lorette is a freelance writer and marketing consultant that specializes in personal finance. She is also the editor of The Mortgage & Credit Diva, a blog devoted to mortgage and personal finance tips, tricks, and advice for consumers. You can read Kristie’s blog at www.mortgageandcreditdiva.blogspot.com or learn more about her writing and marketing services at www.studiokwriting.com.