All Forum Posts by: Michael Hellman

Just to add a little more info about my situation.  Because the original property was purchased for 214,000, and a portion of the original property was sold for 173,00, our logic was that no gains had been created since we were still below the original purchase price.  However, when the remainder of the original property was sold it would then create a capital gain with a reduced cost basis from the purchase price of the original property.  Thanks for all who chimed in, trying to get this sorted out.  

Ok thank you for your input.  This was reported to the IRS on my Schedule E for that year.  This was the advice I was given by my CPA at that time.  I certainly was not looking to do anything fraudulent.  I guess the way she explained it to me at the time is that the tax would still be paid, just deferred by reducing the cost basis and paid when the property was sold.  Looks like I'll need some more professional help, and hopefully get better advice this time.  

Hello.  I purchased a home in late 2007.  I live in a small garage apartment for 4 years while renting out the main house.  The property had a large double lot in a nice neighborhood, so in 2014 I subdivided the lot and sold the empty portion of the lot to a builder, and kept the main house on the lot that remained.  During the time of the sale, the bank would not release me from the original mortgage, so most of the proceeds from the sale of the lot went towards paying off the mortgage.  At that time I did not have the cash to pay capital gains taxes on the sale of the newly subdivided lot so I reported it against the cost basis of the original purchase price.  In 2019 I sold the remaining house on the remaining lot.

My question is this.  I originally purchased the house for $214,000.  In 2014 I sold the subdivided lot for $173,00.  I sold the original house on the portion of the lot that was remaining in 2019 for $245,000.  Does this make my new cost basis $41,000 (214,000-173,000)?  I'm trying to figure this out in Turbotax which is anther challenge.