I would start with the roof. I would apply a portion of the sales proceeds that is equal to the book value (Cost basis less accumulated depreciation) to the sale of the roof. This will result in no gain or loss. For the remaining proceeds, Allocate it to the land and the structure based on the ratio of their value for tax purposes. For instance, if the tax assessor has the property assessed for a total of $600,000 - $500,000 for the structure, and $100,000 for the land. You would apply 1/6 of the proceeds (after deducting the amount allocated to the roof) to the sale of the land, and 5/6 of the amount to the structure.
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