I am not going into the "own 50% "issue which would indicate a partnership but instead focus on your questions.
1. Since married, you have been unable to deduct losses due to income. Those losses are taken when you dispose of the house.
2. Sales information - Enter half the sales price and half of the land value.
3. Gain creates large tax bill- once you change the sales price that will help. Next, look at how gain is calculated.
Here is an example:
- Purchased house $200,000 - original basis of $100,000 for you
- Depreciation since purchase $65,0000
- Losses not allowed since you got married $10,000
- New basis in house $100,000-65,000 + 10,000 =$45,000
- Sold house for $220,000 - your share is $110,000
- Gain is $110,000 sales price minus $45,000 basis = $65,000 in income.
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