Thanks for your reply. As a follow up. I just went into real property data and it is showing total value as $179,500 with land being worth $62,00 of the total. So 34.5% of the value is apparently in the land. I sold for $223,000, with $4775.80 in seller help and $3,000 in closing cost. We also spent $4500 on a new roof and about $2,000 on other repairs to the home prior to sale. Am I understanding correctly in that the sales price I should be using in TT is $146,065 (65.5% of $223K) less $5,093 (65.5% of the seller help and closing cost), less $6500 for the new roof and other improvements (since they were not part of the land)? Bringing my total adjusted sales price to $134,472?
As for the value when put into service, how do I find out in TT if I used the cost basis or the FMV. TT is showing put into service 7/15/2013, cost $200,000, land $62,000, business 100%, prior depreciation $31,483. This makes me think TT defaulted to the FMV, as we originally bought it for $165K and I am sure the percentage split then was likely around the same so 65.5% of the $165K would have been for the home with the remaining being land. That would have put the starting home value at $108K and even having remodeled every room, I did most work myself so I don't think we spent $100K in total on improvements to bring the total to $200K. So perhaps this was a mistake from the beginning but guessing it can not be resolved now and likely doesn't matter other than it allowed for potentially a greater depreciation each year than I should have been taking and will now need to make that up in depreciation recapture taxes.
Again, if I am understanding correctly, you are saying I should use the $108K (65.5% of the original purchase price) as my starting position and add to it the cost of improvements that I have made over the entire 16 years of ownership and 65.5% of the closing cost and seller contributions regardless of the "in service" amount? And from this figure I will use the $134,472 that I came up with in the first paragraph and will pay taxes on the difference? If this is the case I may not be in as bad of shape as I expected because I am confident that over 16 years we would certainly have had more than $30K in improvements (most while not being rented) but not sure I have the ability to document all of this since it is over a 16 year period. If this is correct, it looks like I may have sold for a lose and only then have taxes due on the depreciation recapture?
If this is not correct, do I then use the $134,472 figure less $108,000 resulting in taxable amount of $26,472 plus the $35,000 in depreciation previously taken resulting in $61,472 in taxable gains?
Once again, I appreciate your help!
