Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
ks9681
Returning Member

Sale of a rental property

I sold a rental property and entered the sale amount and asset expense of  sale including outstanding mortgage pay offs and closing costs. All filled out in the right area of TT. My 4797 line 2 (f) is giving me a very high number for cost or other basis. I have carried deprecation for many years with this property purchased in 2006. What goes into that number. It show a very high loss 

5 Replies
tagteam
Level 15

Sale of a rental property

Your mortgage balance, in terms of a payoff, does not enter into the gain or loss equation.

 

Do not add your mortgage payoff amount to your cost basis.

ks9681
Returning Member

Sale of a rental property

But isn't that part of the asset expense of sale?

tagteam
Level 15

Sale of a rental property


@ks9681 wrote:

But isn't that part of the asset expense of sale?


No, it is not part of the cost basis or a selling expense. 

ks9681
Returning Member

Sale of a rental property

Where would I put in paying off the mortgage, without that I'm paying more taxes than I made off the sale.

tagteam
Level 15

Sale of a rental property

Paying off the mortgage does not factor into your gain/loss equation; you do not put it anywhere on your return.

 

A large part of the problem (in terms of taxation) with selling rental property is depreciation recapture, which essentially lowers your basis and, as a result, typically increases gain.

Dynamic AdsDynamic Ads
Privacy Settings
v