How you allocate the cash is important. If, for some reason, you allocated $500,000 to the sale of the home and $500,000 to the sale of the lot, you’d pay no taxes on the sale of the home but would have a $490,000 profit on the sale of the lot so instead of paying capital gains and the 3.8 percent Net Investment Income Tax on $250,000, you pay it on $490,000. Obviously, the IRS would get a larger portion of that check.
