DEAR BOB: My husband and I are in the process of selling our primary residence and 21 acres of adjoining land that will probably be developed for houses by the buyer. We know our residence qualifies for the $500,000 principal residence sale tax exemption of Internal Revenue Code 121. But can we subdivide the property so the land portion can qualify for a tax-deferred exchange under Internal Revenue Code 1031? --Erin H. DEAR ERIN: You don't need to go through all the hassle of subdividing the property into two parcels. All you need to do is find a tax attorney or tax adviser, probably a CPA, who is familiar with Internal Revenue Procedure 2005-14. You will probably also need to hire an experienced appraiser to allocate the value between the residence and land portion of the sale. Purchase Bob Bruss reports online. This tax procedure allows you to claim, in one transaction, both the IRC 121 principal residence sale tax exemption and the IRC 1031 tax-deferred exchange benefits for the vac...
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