Since you sold at a gain, you just have to allocate your sales price to show a gain on all assets. Doesn't matter if that can is $1 on some assets, and $100,000 on other assets. A gain, is a gain, is a gain. Period. That way all prior depreciation will be recaptured and taxed as ordinary income, instead of potentially being taxed at the higher capital gains tax rate. Also, to add clarity I'm going to assume sales expenses of $10,000.
First, figure the cost of the structure by subtracting the cost of land from the total cost.
COST: $559,825
COST OF LAND $198,698
STRUCTURE: $361,127
Now divvy up the sales price. since cost of land is 35% of the total sales price, I'm allocating 35% of the sales price to the land. The rest gets divvied up between the structure and roof, and is done in a way to show a gain on each of those assets.
LAND Cost: 198,698 Sales Price: $244,650 Sales Expenses $3,000
STRUCTURE cost: $361,127 Sales Price : 449,000 Sales Expenses $,7000
ROOF cost: $4,284 Sales Price: $5,350 Sales Expenses $0
Note that the total sales price of each asset comes to $699,000 as it should.
Gain on the land is $42,952 (244,650 minus $3,000, minus $198.698)
Gain on the structure is $80,873 (449,000 minus $7,000, minus $361.127)
Gain on the roof is $1,066 ($5,350 minus $4,284)
Note my sales expenses are claimed only on the land and structure. There's no need to allocate the sales expenses further, as once they're claimed between the land and structure, you're done. Allocating sales expneses further will not change your SEC1250 gain at all.
Note also that I have not included the recaptured depreciation here, since I don't know how much depreciation you've taken. But it doesn't matter since depreciation recapture is taxed separately. while the gain shown on each asset is taxed at capital gain rates, recaptured depreciation is taxed as ordinary income and the tax on it will not exceed 25%. (recaptured depreciation is taxed anywhere from 0% to a maximum of 25%)
