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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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How do I determine the cost of land that was subdivided from

Customer Question

How do I determine the cost of land that was subdivided from my home property. The home was purchased in 1981 for $124,000. However the subdivision occurred in 2013.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
That will be two steps procedure.Please consider following illustration example.Assuming your tax record indicates that the value of the land is $180k and the value of building and other improvements $300kSo - we will have that land is $180k / ($180k + $300k) = 37.5% and the building is $62.5% of the total value.Thus - the original purchase price - that is your basis will be allocated $124,000 * 37.5% = $46500 to the land.Then assume you have total 6 acres and subdivided 2 acres - thus the basis will be apportioned between these two parcels $46500 * 2 / 6 = $15500 - will be allocated to subdivided part.Questions?