I sold a land parcel for $233k that had a basis of $53167.46. I bought 2 land parcels and a parcel with a house for a total price of $552500. I calculated the allowable "exchange expenses" at $15553.11.
TurboTax Form 8824 says I has a realized gain of 164280 and line 25 shows a new basis of $388220. Take 233k - basis + expense to get the gain (ignoring the pennies) and that is what I got, but the new basis number makes no sense to me. The mortgage I took on that house was for $337836.32, so that plus the transferred basis is $391003.80 which is higher before taking any expenses into consideration.
So going forward do I use my calculations for basis or must I start with Form 8824 Line 25?
Then how would I split the basis (whatever it is) over the 3 properties? Split the basis so there is gain on each property, or can I make the land only ones all basis and the gain go entirely on the house? Another thought, the properties all abut and were once a single parcel can I treat it all a a single "land" plus house? Once I have the split I know to use the property tax split of 10/90 to separate land from house.
I have a bunch of expenses to find the identified exchange properties, do home inspection and other closing costs before even beginning to make the house rentable, repair and furnish, which I'm required to do.
Would these all be added to the depreciable basis for the house added to Schedule E?
Can I even just add all the costs up to the house being ready to rent to use as the house "cost" and depreciable basis?
