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 » From: Lenexa, KS Dear TaxMama: What is the best way to determine--in a manner acceptable to the IRS--the cost basis of vacant land inherited 80 years ago and recently sold? Bob Dear Bob, Well, the BEST way is to produce the original bill of sale. You want an alternative way? Land sales tend to be recorded with a government agency. (In California, it's the County Recorder's office.) What agency handles that for Kansas? Contact them. They may have a record on file. Also, contact a title company and see if they can produce an 'abstract of title' for you. This generates a copy of all documents that have been recorded with respect to the property - deeds, grant deeds (loans), zonings, easements, etc. On the other hand, it may be a little easier than that. See if you can find something objective to determine what land was selling for 80 years ago. (Newspaper archives, real estate historical records, etc.) Essentially, your 'cost' or basis is the value of the land on the date of the death or the person who willed it to the heir . You will need objective documentation to back up your claim about the value if you're ever audited. The cost also includes all improvements to the land, like bringing in utilities, connections to sewer systems, etc. And if all the property taxes have been paid for the last 80 years, without being deducted, you may add those to the 'cost' too. Best wishes, Eva Rosenberg Your TaxMama  |
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