Submitted By: someone
Answered: May 3, 2021 11:03 pm

I sold some vacant land that was part of my principal residence. As a result, I had to repay a home equity loan. Is this a capital loss?

You may have a capital gain on the sale of land adjacent to your home. Whether or not a mortgage is involved does not impact gain or loss for federal income tax purposes. However, you may be able to use the home sale exclusion (which is up to $500,000, or $250,000 for singles) for gain on the vacant land adjacent to your home if the sale of the vacant land and the sale of your home occurred within 2 years of each other.

Tax Glossary

Individual retirement account (IRA)

A retirement account to which up to $4,000 (or $5,000 if you are 50 or over) may be contributed for 2007, but deductions for the contribution are restricted if you are covered by a company retirement plan. Earnings accumulate tax free.

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