Property could be subject to capital gains tax

Q:

It seems I will soon come into ownership (via my mother’s passing) of a property that is divided in two portions: a home and 10 acres that are more suited for commercial development. How would tax reporting and capital gains be handled if the property is divided as such and then only one of the two portions is sold? How does one value the portion sold for the $250,000 in capital gains exclusion?

For instance, if I were to sell the commercial portion for $350,000 and had put a stated value of $100,000 at time of my mother’s death, does that mean that any future sale of the home portion would be subject to capital gains tax? Or how would all of this be handled or divided? By acreage only? — K. A., askedith.com A: I am not an accountant, and I am not a lawyer. I do know your cost basis for either portion is its value at the time of your mother’s death. If you sell for more than that, the difference would be subject to capital gains tax.

You didn’t say whether the property currently has two separate property tax accounts. When you settle the estate, ask your lawyer whether you can have an appraiser evaluate two separate portions, with a reasonable acreage attributed to the home.

That $250,000/$500,000 homesellers’ tax exclusion applies only to a place you’ve owned and occupied as your main residence for at least two of the five years before the sale.