Land with Residence Sale

[WhiteOleander]

Client wants to sell her residence which is on aprox. 30 acres of land. The land has never been used for trade or business.

Can she exclude the land under Sec. 121? From reading Pub 523 it does appear so. However, they do not give any kind of idea on how much vacant land can be included with the house.

Thanks

[Brad Imsdahl]

TTB, page 6-20 makes a similar statement. The sale of vacant land adjacent to land containing the taxpayer’s principal residence qualifies for the exclusion. No acreage limit is given.

It makes sense that there should be no acreage limit. What would be the point? There is already a dollar limit. So for example, if you have a $300,000 house and lot, plus adjacent 150 acres of land with a value of $250,000, you are still limited to $500,000 as an exclusion for MFJ. The amount of acreage for the adjacent land is irrelevant, as the dollar limitation will take care of any unreasonable amount of land you try to include.