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

Capital asset

Property subject to capital gain or loss treatment. Almost all assets you own are considered capital assets except for certain business assets or works you created.

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