Sold Rental Property and Received 1099-S, how to divide sale price between building and assets that were depreciated.

[taxesohmy2017]

I need some advice here. I sold my rental apartment property in 2021 for $120K. I broke down the sale between building and land, building sale portion comes to $114K Land sale $6K because when I bought the rental property back in 2004, I had building and land broken out on my depreciation.  

Total Purchase Price: $105K  ( back in 2004) - allocated $100K to Building and $5K to Land.  My question is I have several assets that I depreciated along the way.  Appliance $6K, Improvements $6200, Refrigerator $519, Carpet $950, Refrigerator $455, Stove $538, Refrigerator $481, Carpeting $1625, Carpeting $1336.  All the items listed above has been fully depreciated.  How do I properly divide the Sale Price of $114K between the building and those assets listed above?  What ratio would I use? There definitely will be a gain, so I  know I be taking tax, I am trying to make sure I allocate the sale price properly to the building portion and the rest to the assets, that will total the $114,000.  Additional information. I did depreciate the building as well, from 2004 to 2021 and I do understand about the recapturing part of that as well.   Just not sure how to breakdown the sale between the building and the individual assets that were listed on the depreciation worksheet. Also, what section on Form 4797 would I list the appliances, improvements, carpeting? Would it be Part I or Part III. Thank you in advance for your assistance.

[MaryK4]

You should have a depreciation schedule with a list of all assets that you depreciated.  You can use the total of any assets included in the sale of the apartment building, then take the depreciation basis of each asset and divide by the total proceeds to get a percentage amount.  You then apply the percentage to the proceeds to get the allocation of the sale proceeds.

[taxesohmy2017]

Thank you, Mary for your prompt response.  Can you elaborate a bit more.  I will provide you with a few numbers from my detail list and please let me know which numbers I should divide with what.

Total Cost or other basis = $123,283 ;  Basis Total: $116960; Accum Depr: $73842; 

On the depreciation work sheet here a few items  listed

Appliances - Cost Basis $6K; Basis $6K ; Accum Deprec $6K

Improvements - Cost Basis $6200; Basis $6200 ; Accum Deprc = $3591  

Refrigerator - Cost Basis $519; Basis $519 ; Accum Deperec = $519

Carpet - Cost Basis $950; Basis $950; Accum Deprec = $950

Building - Cost Basis $100K; Basis $100K; Accum Deprec = $59237

These are just a few items. 

Sale Price was $120K, however I allocated that between the building and land; Building was allocated $114K and Land $6K.

Can you please demonstrate one example using the data I provide above? Thank you

[Critter-3]

Ok ... a simple example of ratios ...  if you have more assets than the example then you will have more lines.  Remember if you divide a big number into a littler number you get a % ...  thus 5000/100,000 = 5%

       original  cost basis          ratios                  Sales price             cost of sale 

home    80000                   80%                          160,000               8,000

land       15000                   15%                           30,000                 1,500

roof        5000                        5%                           10,000                   500 

totals     100,000                100%                        200,000               10,000

All you need to enter into the program is the % of sales price & % of cost of sale for each asset.  

[taxesohmy2017]

I got it now, thank you so much!

[taxesohmy2017]

One last question, does it matter where I place the appliances, refrigerator, stoves on the Form 4797? I have the land on Part I, building and improvements on Part III.  Should I put those items in my first sentence Part I or Part III of Form 4797

[taxesohmy2017]

I have a follow up question.  First of all, thank you for the example listed above. It helped out tremendously. I was able to divide the sales price among all the assets.  One question I do have is the last column - Cost of Sale.  That is 10% of the original cost basis - does that appear on Form 4797 anywhere or do I add that to something else? And where was the 10% derived from? 

I am honestly trying to understand all this, so if I shall do this again, I better prepared.

Thank you Critter-3!

[JamesG1]

I think Critter-3 was simply allocating a $10,000 cost of sale (sales commissions, perhaps?) across the three items based upon the original cost basis.

IRS Form 4797 Sales of Business Property will include costs of sale:

• In column (f) for property reported in Part I and Part II, and
• On line 21 for property reported in Part III.

[Sa121]

Do i still enter the 1099-s in the other income section? In addition to doing this calculation of allocation?

[PatriciaV]

If you are reporting the sale of Rental Property with several assets, use the allocation calculations to enter a sale for each asset that was sold. In this case, you would NOT enter Form 1099-S in any other section of TurboTax.

The example in this old thread was for rental property with several assets already entered. Each asset must be edited to report the allocated portion of the sale proceeds from Form 1099-S in order to calculate the gain or loss. 

@Sa121