What do I include in the Asset Sales Price and Asset Sales Expenses for sale of rental apartment? Do I include the mortgage balance in the Asset Sales Expenses?

[pk]

The sales price  is composed of actual contract sales  amount plus sales commission paid to a realtor plus any expenses for preparing the property for selling plus any other expenses incurred during the sales closing ( transfer tax , allocated  property tax share, etc. etc. ).  The mortgage balance is NOT included in the computation.  Please go through  your closing statement ( or HUD-1 form ) -- this  will call out all the  expenses / commissions etc., except those that you paid for directly prior to closing such preparing the home for sale ( cleaning / maintenance/repair/ repainting etc. etc. ).

Does this help or do you need more ?

[Davewil3]

When entering my asset sales expense on my Federal return, is withholding for State capital gains an allowable asset sales expense?

[Carl]

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in  2021". Select it. After you select the "I sold or otherwise disposed of this property in 2021" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even if it's zero. Then you MUST work through the "Sale of Property/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets.  You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset.  Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.

Basically, when working through an asset you select the option for "I stopped using this asset in 2021" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.

[Davewil3]

You misunderstood my question. This is a rental property sale. My question is about what are allowable sale expenses that occur at closing. Commissions for sure. But how about the $90,000 that I must pay in Hawaii state Capital gains tax? Is that an allowable sale expense I can claim on my Federal return?