Trump Tax Reform to Capital Gains Exemption for Primary Residence

[Daniel Klucas]

We are in an odd position if this tax reform to the capital gains for primary residence gets passed as planned.  

We've owned our primary residence since October 2014.  Since we had over an acre of land we had it surveyed and subdivided.    

The first of November (2017) we sold off the three subdivided lot from our primary residence to a developer/builder.  We were planning to on selling our house our after the new construction was complete to maximize our profits.

Under current law both the sell of the land and the sell of the home would qualify together for the $250/500K Capital Gains Exemption for Primary Residence Sells.

Now due to the Trump tax reform change from the current 2 out of 5 years requirement to the revised 5 out of 8 year for this exemption, next year we will stuck between these two requirement since half of the transactions will have taken place prior to these reforms being passed and the other half after...............

I have read no where of any kind of provision for grandfathering in any exemptions.

Not sure how to handle this one but we don't want to get stuck paying taxes on the 150K profit we made.

Any advise is much appreciated.

Per IRS Publication 523 (page 5)

"Vacant Land Next to Home If you have vacant land adjacent to the land on which your home sits, you can only claim the sale of that land as part of a sale of your home if ALL of the following are true. You owned and used the vacant land as part of your home. The sale of the vacant land and the sale of your home happened within 2 years of each other. Both sales either meet the eligibility test or qualify for partial tax benefits as described earlier. If your sale of vacant land meets all these requirements, you must treat that sale and the sale of your home as a single transaction for tax purposes."