Principal residence question

[CAowner]

What is the name of your state? CA

Two years ago, I bought 10 acres of "vacant" land with the intention of building a house. The land is not actually vacant as it has an unpermitted cabin on it. I also moved a travel trailer onto the land and have lived here for two years. (There is electricity and a well.) It is my principal residence...I have no other. I have decided not to build and would like to sell the property.

My question is: If I have a capital gain, is it exempt from income tax? Or is it required that there be a "house" on the land to qualify as a principal residence?

Thanks for your help.

 

[LdiJ]

What is the name of your state? CA

Two years ago, I bought 10 acres of "vacant" land with the intention of building a house. The land is not actually vacant as it has an unpermitted cabin on it. I also moved a travel trailer onto the land and have lived here for two years. (There is electricity and a well.) It is my principal residence...I have no other. I have decided not to build and would like to sell the property.

My question is: If I have a capital gain, is it exempt from income tax? Or is it required that there be a "house" on the land to qualify as a principal residence?

Thanks for your help.

By "travel trailer" do you mean an RV or camper? Or do you mean a mobile home?

 

[CAowner]

It is not a mobile home, but an RV trailer with wheels.

Thanks.

 

[LdiJ]

It is not a mobile home, but an RV trailer with wheels.

Thanks.

That is a "murky" one.....you really need a consult with a local professional. I personally wouldn't "call" that one without doing some serious case law research.

 

[CAowner]

Since I don't expect my capital gains to be over ~$40K, I'm not sure that I want to dance with the IRS to "murky" music over, at most, $6K. But somehow, this just doesn't seem right. I owned it, I lived on it. I suppose that instead of paying cash for land, I should have put 25% down on some tract house in Sacto and, in addition to the mortgage interest deduction, all my gains would be tax-free. Then again, I got to live for two years on 10 totally private forested acres of pine trees, incredible wildlife and clean mountain air. Priceless. (Yes, I did read Walden while living here!)

If anyone else has input, I'd love to hear it.

p.s. There is a 10-acre lot not far from here that is being advertised as "including a 25' travel trailer." Wonder if they are thinking the same thing....