Investors & landlords

Here is the bottom line for your answers and how to proceed with the sale of your rental property.

1. The cost basis for you is half the original cost plus the additional amount you used to buy out your former spouse, plus expenses of the purchase at that time.
   • You gave half of the property to your former spouse when you added his name to the deed.
2. You are entering it in the correct location. It must be sold in the asset section of your rental activity. You have the correct information in the assets because his actual cost basis would have been your cost basis on the date of the gift.  In other words your cost, depreciation, etc is correct with your adjustments after the gift. It is not necessary to delete anything or combine anything.
   • You must allocate the sales price to each asset - use the example below to arrive at the sales price and sales expenses for each asset.
   • Example of arriving at the selling price and sales expenses for each asset in your rental activity.

• Example:  Original Cost (of each asset on your depreciation schedule)
• $10,000 Land                = 13.33% 
• $50,000 House              = 66.67%
• $15,000 Improvements  = 20%
• $75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

Do not say 'Yes' to Special Handling for these assets.  TurboTax will carry the gain to the appropriate location on the tax return.