How do I fill out Tax form 4797 after sale of a rental property?

Forum|Forum|7 years ago
May 31, 2019
1 reply
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Hello all,

I am trying to figure out how to fill out form 4797 for the tax year 2013. The duplex was purchased in 2007 for $240,000 and sold in 2013 for $251,900. It was used as a rental property the entire time and was never owner occupied. Here are the facts............

- Purchased in 2007 for $240,000 (Land: 50,000 Building: 190,000)

- Sold in 2013 for $251,900

- Fees associated with sale of the property: $13,500

- Depreciation over the 6+ years: ~$34,000

- No improvements were made to the property during this time

For line 20 (of form 4797) I put 251,000. I assume this is correct.

My questions is what do I put for line 21. Do I put the original cost of the building and land plus the fee's associated with the sale? Or is it just the building value (at time of purchase, plus associated fees).

Where I am confused is that I am not sure whether to count this as 1 sale (building and the land combined) or 2 separate sales (building and land), and how this relates to "Part I" of form 4797.

Any help would be greatly appreciated! Thanks!

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Best answer by CherylW

Dear bigbarr25,

I'm mocking it up right now, and the first thing I did was to separate the selling price into land and building. If you don't have an exact breakdown, prorate the selling price based on the purchase price. Make sure you allocate the selling fees, unless you have them already broken out.

The sale of the house goes in Part III of the 4797 as a Sec. 1250 Property. The sale of the land goes on Part I of the 4797. It gets combined on line 13 of your Form 1040 as a capital asset.

So the answer to your last question is this does count as two sales on your 4797, but one as a Schedule D capital asset.

Please feel free to post back to this thread with further questions--I'll leave my pretend sale in in case you need any more help.

Good luck!

CherylW

CherylWAnswer

Level 11

Dear bigbarr25,

The sale of the house goes in Part III of the 4797 as a Sec. 1250 Property. The sale of the land goes on Part I of the 4797. It gets combined on line 13 of your Form 1040 as a capital asset.

So the answer to your last question is this does count as two sales on your 4797, but one as a Schedule D capital asset.

Please feel free to post back to this thread with further questions--I'll leave my pretend sale in in case you need any more help.

Good luck!

CherylW

bigbarr25Author

Level 2

Thank you very much for your response Cheryl! I am still a little confused as to how some of the forms are filled out. My 1099-S (proceeds from real estate transaction) shows 251,900. Does this go on line 20? What do I put on line 21? (building only? or building and land). The problem is that if it's only the building, I get a total gain of around 75,000 including depreciation which seems way too high. I hate to get so specific but I am still unsure as to what I need to put on Lines 20-24 of form 4797? Is it possible my 1099-S is wrong or do I figure out the land and building value myself from the total value? Thanks in advance!