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twodustyduck
Level 1

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

I have used an methodology answer via turbotax query to calculate my gain on sale of a rental property in 2016.  However, I have ready many different means for calculations and wish to be certain I have done it right.  Can I provide the calculation and have someone verify it is the correct way to do it.?

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Accepted Solutions
view2
New Member

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

Try this with pen and paper.

The formula for calculating your cost basis on rental property is as follows:

* Purchase price

* + Purchase costs (title & escrow fees, real estate agent commissions, etc.)

* + Improvements (replacing the roof, new furnace, etc.)

* + Selling costs (title & escrow fees, real estate agent commissions, etc.)

* - Accumulated depreciation (as reported on your tax forms)

* = Cost Basis

And then calculating your profit or loss would be:

* Selling price

* - Cost Basis

* = Gain or Loss

  Any time you sell depreciable property, Form 4797 is required to prepared. 

With the desktop version click forms upper right and then when screen opens look in the left panel for Form 4797 and click on it to open and you can see the calculation results by Turbotax.

View solution in original post

6 Replies
view2
New Member

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

Try this with pen and paper.

The formula for calculating your cost basis on rental property is as follows:

* Purchase price

* + Purchase costs (title & escrow fees, real estate agent commissions, etc.)

* + Improvements (replacing the roof, new furnace, etc.)

* + Selling costs (title & escrow fees, real estate agent commissions, etc.)

* - Accumulated depreciation (as reported on your tax forms)

* = Cost Basis

And then calculating your profit or loss would be:

* Selling price

* - Cost Basis

* = Gain or Loss

  Any time you sell depreciable property, Form 4797 is required to prepared. 

With the desktop version click forms upper right and then when screen opens look in the left panel for Form 4797 and click on it to open and you can see the calculation results by Turbotax.

eplaumann
New Member

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

Can you help with this:  when I enter the date in the "Sales of Business or Rental Property" screen, does "Gross Sales Price" mean what the house sold for, or what I received after the loan was paid off?  Also, as far as I know, any depreciation from the years the house was a rental has not been applied to prior year's taxes, so do I leave the "Depreciation Taken" field empty?
view2
New Member

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

@eplaumann "Gross Sales Price" is what the sale price call for on the contract.
Selling expenses are listed  in another area.
Depreciated is recapture on of a residential rental property  sale .
Depreciation recapture comes from the Taxpayer Relief Act of 1997, which imposed the higher tax rate for all IRC Section 1250 gains, which for means all rental property investments. When you sell the property, you must “recapture” any depreciation you’ve taken “allowed” (or could have taken “allowable”). ( The IRS will TAKE IT  even if you had not claimed the depreciation in earlier years)
The loan payoff is not relative to filing gain or loss on a sale for your taxes.
twodustyduck
Level 1

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

This does not quite answer all of my question as when I examine the gain analysis using TT, there is no entry that shows I was given credits for declared improvements.  The TT only shows depreciation.  What happens to the remaining value of improvements once the property is sold?  It seems there is no credit given for improvements to bring up the adjusted basis.
twodustyduck
Level 1

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

A followup to @eplaumann. When I look at the Tax Year 2016 Form 4562, it lists the improvements made in the Cost(net of land) column but the gain calculations only use the original cost figure less accumulated depreciation. No credits are given to the stated improvements on this form.
view2
New Member

I wish to confirm my calculations on gain on sale of rental property in 2016, how can I do this in such a format?

The total sales price should be allocated among all the assets (land, rental property, improvements, etc.)

 If you have already allocated 100% of the sales price, then enter zero [entering the "0" will trigger the calculations] for these remaining assets and improvements.

Enter the date of sale (same as the rental property) for each asset/improvement.

Turbotax will automatically "write off" the remainder of the basis (cost minus depreciation). You don't have to manually do that.

You have to edit each asset that is listed for the rental property and enter the same date and the zero in the the sale section to have each asset to be used in the calculations.
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