Just to let you know my home and lot next door are separate. Building on the lot is a great idea, but we are moving to Bend Oregon,(due to a new job & kids need to be in school in the Fall) and we would like to sell the two pieces together so we can buy a new home there. I made a call to my CPA, and we'll see how it works out tax wise!! I would love to sell the two together if I can, but I'll leave it open for all options!
You are all great thanks!
Do you need to sell right now?
Do you need to sell BOTH if you can split them?
Talk with a CPA about the tax implication, talk with a Realtor about the options, because part of the tax rules relate to in which tax year sales occur.
That said...a few considerations:
To sell the house and lot separately, you will need to go through a lot segregation process with the City of Portland. Not too difficult, but will cost around $750 for the application, and will likely require a survey (~$2,000), then some additional fees to record a new deed and tax lot, assuming it's approved (likely, given the city's predilection for infill development).
It would be easier to sell the property intact, leaving the segregation process, costs, and due diligence with the city to the buyer. But you'd likely make more if that work were already done and the lots were separate. Now, we're back to the tax situation... :)
You should ask your realtor to have this property listed twice, one for the entire property and one for just the lot. On both listings, it should state that the two can be sold together or separately. That would require getting a CMA on each property and one for the combined amount. If your tax accountant says it would be more beneficial to sell them together, then you should understand the tax consequences before making the final sale.