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Is a rental property seller credit considered a part of selling expenses when calculating gain or loss of a sale? Where do I report this in Turbotax?

Forum|Forum|6 years ago
May 12, 2020
1 reply
4 views

I sold my rental home in mid 2019 and gave the buyer a seller credit of $1,750 which is listed on the closing statement. The 1099-S reported only the sale gross proceeds of $300,000. Can I include the $1,750 amount as a selling expense in calculating gain or loss? If so, where do I report this in Turbotax? I am having a hard time figuring this out. Thanks in advance for your help.

TurboTax Premier Online

Best answer by Hal_Al

I would add the $1750 to your cost basis, to reduce your capital gain.

Alternatively, you can call it selling expenses.

The "correct" way is to reduce the selling price, but that risks waiving a red flag at the IRS, since the 1099-S is more. Form 4797 actually has a place to enter the 1099-S amount (and TurboTax does that). So, you may be OK, even when you report a different sales amount than shown on the 1099-S.

Answer

Level 15

I would add the $1750 to your cost basis, to reduce your capital gain.

Alternatively, you can call it selling expenses.

The "correct" way is to reduce the selling price, but that risks waiving a red flag at the IRS, since the 1099-S is more. Form 4797 actually has a place to enter the 1099-S amount (and TurboTax does that). So, you may be OK, even when you report a different sales amount than shown on the 1099-S.

Level 2

Thank you for your response. I will explore the options that you suggested. Appreciate your guidance!