Hello everyone, I have a question regarding a partial sale of land of my main home in 2025. The city is expanding the main roadway outside my house and the payment I received was broken down into (3) 1099-S with the following breakdown:
I received $X for the sale price of property
I received $Y for a one-time compensation for an easement for Utility company to put poles on my property.
I received $Z for Damages including the value of trees and sprinklers that had to be cut down/removed as well as loss of property value resulting from my home eventually being closer to the main roadway.
Trying to understand how to report this transaction on my taxes (using FreeTaxUSA).
Reading other posts, It seems like $Y and $Z I received would not be considered taxable as the total received is less than the cost basis of my home so there is no gain to record.
The $X payment was for 15% of my property. Do I check for gain by comparing it to 15% of my cost basis?
I hope I explained this clearly and thanks in advance to anyone who can help
Question regarding how to record partial land sale of main home
byu/BuyAnAvalon intax
Posted by BuyAnAvalon
1 Comment
For X you need to break up your cost basis into land and building. Your property tax records are the easiest place to find that since it’s usually broken up that way. Multiply your original basis by the property value percentage and by the percentage of your land that was taken. Since it’s involuntary you can look into buying some other land to defer the taxes.
For Y if the amount matches what you feel the property decreased in value by the easement then not taxable now but does reduce the basis on your house when you eventually sell.
For Z the $ used to fix the trees and sprinklers aren’t taxed but the remaining funds for the closer road compensation reduce the cost basis for your property