Client lived in trailer on 20 acres for 10 years, moved trailer to new location in 2011, and in 2013 sold the acres. Acres were never used for anything but personal. Will the sale of the acres qualify for the home exemption?
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Nope.
Regulation 121-1(b)(3):
The sale or exchange of vacant land is not a sale or exchange of the taxpayer's principal residence unless—
(A) The vacant land is adjacent to land containing the dwelling unit of the taxpayer's principal residence;
(B) The taxpayer owned and used the vacant land as part of the taxpayer's principal residence;
(C) The taxpayer sells or exchanges the dwelling unit in a sale or exchange that meets the requirements of section 121 within 2 years before or 2 years after the date of the sale or exchange of the vacant land; and
(D) The requirements of section 121 have otherwise been met with respect to the vacant land.
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Soil Bank
20 acres is really a stretch to be considered someone's front yard [backyard]. Yet it qualifies as part of a personal residence if the conditions are met.
On one occasion, I was aware of 45 acres as being considered a personal residence. Owner had a CCC statement from US Dept of Agriculture they were paying him for not farming the 45 acres. In my opinion, reliance on a CCC statement raises more questions than answers, but the preparer filed the acreage as being personal residence, relying on the USDA statement as evidence.Comment
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Seems to me that would be evidence that it was a farm.Comment
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