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Tax Law (Questions About Taxes)/Capital Gains and Eminent Domain


Mr. Stancil,

I am a land agent for eminent domain acquisitions. many of the property owners ask about taxation for the property they are selling. If the acquisition is not a total take, and is a portion of their primary residence, will the primary residence exclusion apply? Basically will they have to pay the 15% like it was investment property? Also, it is my understanding that only the land and Improvements are taxable not the damages. Is this correct?


Thanks for your question.

If the property taken is a part of the taxpayer's primary residence, the primary residence exclusion applies only if the remaining portion of the property is sold within two years of the sale of the taken property.

Damages are not taxable, but reduce the basis in the property.

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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