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New construction home- Tax basis is $1.2 mil. Purchased the…

Customer Question
New construction home- Tax basis is...
New construction home-
Tax basis is $1.2 mil.
Purchased the lot in June 2015
Home was completed in July 2017
Looking to sell and trying to determine capital gains tax.
If there’s a gain of $600,000, what will the short term and long term cap. gain be?
Submitted: 2 months ago.Category: Tax
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Answered in 15 minutes by:
12/12/2017
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 2 months ago
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 533
Experience: Adjunct Professor
Verified
Hey, I'm Carter, I'm a CPA would be glad to help you out with this.
The answer will depend on she you started construction.
So, you need to allocate the basis between land and the home. You technically have two sales then. The sale of the land, which will be long term since you held it for over a year and the sale of the home which will be a short term gain if you sell within a year of constructing it.
If you are in the business of building homes it is considered inventory and will be an ordinary gain.
Hope that helps. Let me know if you need clarification. If not, please leave a rating. Thanks!
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Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 2 months ago

Hey! Just wanted to follow up to see if you need anything else. If not, please leave a rating. Thanks!

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