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Tax Law (Questions About Taxes)/Sale of Main home with leased farm land


My mother sold her home and surrounding 33 acres of land in Ohio.  She rented the land for many years to a farmer who grew corn and/or soy beans. The rent she was paid was reported on Schedule E.
At closing my mom was issued a 1099-B for the full amount of the sale.

My dad passed away within the past year.  They always filed joint tax returns.

Is the sale of the land and home reported together?  If not, how is the cost basis allocated on the land?

Is she looking at a $500,000 exemptiom on the gain?

Is any of this $500,000 allocated to the land she rented?

Thank you.



Thanks for your question.

Since the land was used as rental, it must be separated from the residence. You would divide the sale price utilizing fair market value. The basis should be divided based on the purchase price - divided by FMV at the time, if possible.  

However, you may get a step-up in basis on your dad's portion that was inherited by your mom.

The $500,000 exclusion is available only for the residence, it cannot be applied to the rental land.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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