WHEN YOU SELL YOUR HOME, VACANT-LOT SALE MIGHT BE TAX-FREE

DEAR BOB: I enjoy your weekly articles and I have a question about having two vacant lots adjoining my house. Where can I find information on selling one lot tax-free? My accountant and attorney can't seem to find this tax law. --Robert R.

DEAR ROBERT: If you sell a vacant lot within 24 months before or after the sale of your adjoining principal residence, then you can include the lot's capital gain along with the home sale as if it were one sale.

When your total principal-residence-sale capital gain is below $250,000 ($500,000 for a qualified married couple filing a joint tax return), and you meet the other Internal Revenue Code 121 ownership and occupancy tests, then your lot-sale profit won't be taxable. However, this provision applies only to one adjoining lot sale, not two. For details, please consult your tax adviser.