Exemption on capital gains tax

Mossy
Mossy Member Posts: 1 Newcomer
in Income

I bought a piece of raw land for 60,000 dollars in May 2024. I paid 5000$ in closing cost and have paid over 300 dollars in interest on the property a month for a year. I am selling this month for 81,500$. Is there any tax exemption on capital gains tax I can do with interest and closing cost I’ve paid?

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Answers

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 119

    Hello,

     

    According to the IRS, you can include your closing costs as part of your basis for the land. So if that 60,000 is just the cost of the land and you paid an additional 5,000 in closing costs, you can then say that your cost basis is now 65,000 which will reduce your taxable gains. (You can look at the link for what other things you may be able to add to the cost basis)

    I am not aware of any deductions for loan interest paid on land. If you were building a home on it, you may have been able to claim the Home Mortgage Interest deduction since the loan was going towards what would be your home which would have been an itemized deduction. But since you said it is raw land, I believe that would just be a personal cost.

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