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Discussion Forum Index --> Tax Questions --> Capital gain determination?
Topcat (talk|edits) said:
| 20 June 2007
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| I have a client who sold some of his farmland. I am having a difficult time determining his capital gains because when he purchased the property the price included the land plus the home. He did not sell his home but only some of the acreage around it. How do I determine that cost basis of the land sold if when he originally purchased the property the price included the home and the acreage? Do I have to do a history search on land valuation at the purchase date? Do I determined a cost basis of the home by square foot? Any adviced would be welcomed. Thank you!
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Chautauqua (talk|edits) said:
| 20 June 2007
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| In many states, the assessor is required to allocate the assessed valuation between building and land. If so in your case, find the ratio of land/building at the date of purchase, and apply this to his original cost. Otherwise, consider paying for a written analysis that does the same thing.
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Smog (talk|edits) said:
| 20 June 2007
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| I agree with Chautauqua. Also, in some statees/counties will have "use" tax reduction. Farms here that are over a certian size can request this reduction in property taxes. The request forms will have lots of data you can use. Also, the application for the use tax reduction can undermine sec 1031 if your not carefull (acreage that applies for 1031 vs 121 for home).
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