you have 1 sales price for the property and that needs to be allocated between the land and building (a Turbotax hangup because it does not allow you to treat the sale as a mass disposition where the tax basis of the land and building are treated as one asset like the pro versions of Intuit software) you have several options a) based on the original cost allocations allocated the sales price and sales expenses in the same ratio b) get an informal fair market value (FMV) appraisal from a realtor and allocate based on the relative FMVs c) allocate just enough net sales price to land so no gain or loss all the gain will go to the building or d) the reverse - allocate just enough net sales price to the building to equal its original cost the rest to the land
this assumes there are only two assets for the rental - land and building - no separate capital improvements.
your gain should be all long-term capital gain of which the amount of depreciation taken will be section 1250 gain. all the options work as long as the FMV of the building is greater than your original cost. in all cases your net gain should be the same. i suggest option a) and second option b)
+ sales price
- sales expenses
- cost of building
+ depreciation taken
- cost of land.
