Sale of rental property

[K46732]

I've asked this question before but need more clarification:

this is under "sale of business property" but the property is a commercial rental property

How do I break up sale price in "Sales Information" section? please read my below questions

• Asset Sales Price _____
• Asset Sales Expenses_____
• Land Sales Price_______
• Land Sales Expenses____

I know what the land value $ and % of the property value was when I bought the property and what current property taxes show: it is $12032. and is 23.74% of the total homesite value (50,684.). however, if I take 23.74% of the sale price it is $87,125. (that seems high---small town and the value of the sale was the rental lease and building)

my question is for: Land Sales Price do I put the $12032.00 or do I put $87125.00?

and how do I break up the asset sales expenses and land sales expenses?

[DianeW777]

Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset.  Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset.

Example:  Original Cost (of each asset on your depreciation schedule)

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.

[K46732]

multiply? do you mean divide? multiply gives me like 8.7 million, if I divide I get the $87,125. number, which seems really high?

[DianeW777]

First you must arrive at the percentage of each asset.  Divide the cost of each asset by the combined total cost of all assets.  This gives you the percentage for each asset. Next multiply each percentage times the selling price and selling expenses.

• In my example if the total sales price was $100,000 and the land is 13.33% then the land sales price is $13,330. 

[K46732]

ok that makes sense, so using your example --are the numbers I typed below correct?

(In my example if the total sales price was $100,000 and the land is 13.33% then the land sales price is $13,330. )

• Asset Sales Price __$86,670.00___
• Asset Sales Expenses_____
• Land Sales Price___$13,330.00____
• Land Sales Expenses____

[DianeW777]

Yes.  Assuming you only have land and building, the difference would be 86.67% for the building (13.33% land  + 86.67% building = 100%).

[K46732]

ok and the:

asset expense of sale 

land expense of sale

would follow the same percentage:

(13.33% land + 86.67% building = 100%)

if I had 10,000. expenses from the sale: $8667. would list under (asset expense of sale) and $1333.00 would list under (land expense of sale)?

[ColeenD3]

Yes, you are correct regarding how to allocate the sales expenses.