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 » From: Mahopac, NY Dear TaxMama: I need help on a possible tax issue involving vacant land purchased thru a large developer in 1985. My contract with them reads that if the property is not buidable I would be refunded my money or another lot exchanged. I just have been denied by the health dept for septic permit. The lot cannot be built on. I contacted the company and am trying to negotiate with them for the return of all the monies I have spent on property over the years, be given back to me. If they agree and I receive funds from them and turn land back to them, is it considered a sale? How would I handle this on my taxes? One other thing that muddies the waters is that I purchased the land from them and paid interest during 10 years. Thanks Penny Dear Penny, Sure, you could report it as a sale. Report as purchase price, using the original purchase date: The original cost All fees for improvements, permits, engineers, consultants, etc. If you didn't deduct the interest, add it to the price now. If you did deduct the interest, then ... never mind. Report as the sales price, the money you get back.Use the date of the check you get. You will either break even or have a loss. It's good to know that the company will be keeping their word to you. Best wishes, Eva Rosenberg Your TaxMama  |
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