Schedule E Line 8 Instructions

[JCDudg]

We converted an attached carport to a studio apartment for rental income.  When entering this information in the Assets/Depreciation section of the Rental Summary I am asked for "Cost of Land," and I give my best guess for the value of the land associated with the studio, $42,000 (because the land is valuable in Hawaii).  But when Turbotax reviews my return, it gives an error that "Land included in cost is too large" for line 8 for Sch E.  I cannot find any formal instructions for that line, is it supposed to land value or land size?  And/or is there a maximum value I can enter?

[ColeenD3]

You have to look at the land related to the garage conversion. You enter the value of the land. One possible method is to take the same percentage of the total house vs the percentage of the remodel. If the remodel is 10% of the total square footage, then take at most, 10% of the land for the remodel. Since it is just the garage conversion, there might not be any land at all that applies.

[Carl]

The amount in the COST box is the value of the structure and land together. The amount in the COST OF LAND box is the amount of COST that you are applying to the land.

COST OF LAND can not be more than COST.