Get your taxes done using TurboTax

No, you cannot include the property taxes you have been paying the last ten years because the property was not an active rental. The multi-unit rental property has been out of service, which is automatically considered converted to personal use for a period of 10 years because it's been sitting empty without making it available for rent.

You can add the $40,000 paid to demolish it as a part of your cost basis. Add that to the original cost and any capital improvements in the early years. Next find or calculate all depreciation allowed prior to you taking it out of service. Next you will report a sale of business property using the steps below.

Sale of Business Property:

1. Income and Expenses at the top
2. Scroll down to Other Business Situations
   • For TurboTax Desktop: Business Income and Expenses > Less Common Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information:
   1. Description of the Property (Machine Type)
   2. Sales Price/Sales Expenses 
   3. Date acquired and date sold
   4. Cost
   5. Depreciation

NOTE: If the land was sold to a relative, the loss is not allowed to be used. If the land was sold to an individual who was not related to you, then the loss will be allowed.