Partial Sale of Land

[Absolut]

Client bought House & Land for $91,145.00 on 9/27/02 w/ 1.6 acres of land. On 9/7/05 they sold .6 acres of land for $41,500.00

They had two appraisals done:

The House & Land was appraised at $147,000.00 - this cost them $300.00 for appaisal

The Land alone was appraised at $40,000.00 - this cost them $200.00 for appraisal

They had to have the land surveyed & perk tested, and this cost $3,000.00

What I want to know is how do I come with a Cost Basis for the land? Would I take the Purchase price divide by 1.6 acres, than take this amount and times it by the amount of land that was sold? Can I add in the two appraisal fees, and Land Surveyed and perk test to this cost?

or would I ....

Take the appraisal value of $40,000.00 divide the total acreage into this, and then times this by the acreage sold?



I know this goes on a Sch D 1st part.

[JG EA]

Hard to say.

An up to date appraisal may be used but would that represent the purchase and the value of the house vs. the land when purchased?

A tax assessment at the year of purchase and the value given the house and the value given the land could be your starting percentages to use against purchase price. Maybe the .6 acreage is very special - take that into consideration.

But if not just take the percentage for the land times the purchase price divided by total acres times the .6 acres. Then add the appraisal fees and perk tests, etc for the .6 acres.

[LawrenceGR]

Or would you just reduce the basis on the home?