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
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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.
But isn't that part of the asset expense of sale?
@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.
Where would I put in paying off the mortgage, without that I'm paying more taxes than I made off the sale.
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.
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