Sale of Business Rental property in 2020

[dforwood]

I am partner with my brother with a business property in a state neither of us live in. THe property is under contract and will close this month, April 2020. Our last rental income was summer of 2019, and we listed it then. Is there any tax implications for my half of the proceed distribution I should be aware of before settling. The property with building has appreciated $165000 in value (Before sales commission)We have staight line depreciated it since placing in service in 2012. Neither one of us wants to re-invest, rather just take proceeds.  Looking for advice and/or concern I need toi know before receiving proceeds

[DianeC958 · Accepted solution]

If the property was owned personally by the two of you, have the title company issue two 1099-S forms, one to you with 1/2 of the proceeds and one to your brother with 1/2 the proceeds.

By each of you having a 1099-S form to report the sale on your tax return, it will make things easier at tax time.

Also you should make an estimated payment on the proceeds you receive from the sale to avoid a penalty later.  You can make an Estimated Payment on the IRS website.

Estimated Taxes: How to Determine What to Pay and When

Since you did not rent the property during 2020, you will report this sale as the sale of an investment property on your return.

@dforwood