Unless you are in the business of selling real estate, you would have capital gains on the sale of each lot. When you sell each lot would determine whether or not the gain was long term.
To report the sale of the lots, you would
- Click on Federal Taxes,
- Click on Wages & Income
- Scroll to Investment income and click on the button beside Stocks, Mutual Funds, Bonds, Other
- Answer Yes to Did you sell any investments in 2017?
- Answer whether or not you received a 1099-B or a brokerage statement
- On the "Choose the type of investment you sold" click on Land
On the following screens, you will enter the sale information, how you acquired the land, if you used the lot for business, rental or investment, and the date acquired and original cost (which would be the cost basis of the lot sold). TurboTax will tell you if the gain/loss is long term or short term gain.
Long-term capital gain is recognized for capital assets that are held for more than a year.
The interest paid as part of the loan payments as well as the taxes paid would be added into the cost of the lots. So the cost basis of the remaining lots would increase by each payment of interest and/or tax.
If you are in the business of selling real estate you would report the sales transactions as income on Schedule C and the interest and taxes paid would be a deduction on Schedule C.
To report the sales on Schedule C, type Schedule C in the search box in the upper right corner and click on Find. You will receive a Jump to link.
Click here for further information about Schedule C.
You used your rental property as collateral but the rental property is unaffected by the loan payments and taxes paid.
