topic cost basis of my rental house in Get your taxes done using TurboTax

cost basis of my rental house

dongwang2000 — Mon, 15 Mar 2021 05:01:11 GMT

Hi,

I am a little confused on how to calculate the cost basis for my rental house.

The house was bought on 2011, on HUD, the number is following:

"contract sale price: 129900"

"settlement charge to borrower: 5249.21"

"gross amount due from borrower: 135149.21"

"total paid by/for borrower: 102856.23"

"principal amount of new loan: 97425"

What is my cost basis from those numbers?

Thank you so much!

Re: cost basis of my rental house

DavidD66 — Mon, 15 Mar 2021 05:20:40 GMT

Your cost basis would be the sales price, plus other settlement fees and closing costs for buying the property. Prepaid interest and real estate taxes paid at closing would have been deductible when the rental property was placed in service and are not included in your basis.

Re: cost basis of my rental house

dongwang2000 — Mon, 15 Mar 2021 05:29:33 GMT

Thanks you David!

I sold the house last year. One more question about the sales price and expenses. Should I include the loan balance to sales price or expenses?

If I do not include the loan balance, the capital gain will be a lot more.

Re: cost basis of my rental house

ColeenD3 — Mon, 15 Mar 2021 12:43:00 GMT

The loan balance is not figured in the gain or loss. It has nothing to do with the sale. It is a personal debt that has to be settled.

Re: cost basis of my rental house

dongwang2000 — Tue, 16 Mar 2021 03:27:22 GMT

Thanks for the reply!

I put the sale price and sale expense in Turbotax. I also put cost basis as you suggested.

However, Turbotax calculated capital gain by using sale price minus cost basis without asking my remaining loan balance. This way my capital gain is very quite without remaining loan balance. Could you tell me where to put my loan balance in Turbotax?

Thanks!

Re: cost basis of my rental house

KrisD15 — Tue, 16 Mar 2021 03:58:58 GMT

Your loan balance is of no consequence.

If I bought a house for 100,000 cash and sold for 150,000, I made 50,000 Capital gain.

If I put 20,000 cash down and took a loan out for 80,000 to buy a 100,000 house and sold it for 150,000, I still made a 50,000 Capital gain.

Loans don't factor in that equation.

Re: cost basis of my rental house

dongwang2000 — Tue, 16 Mar 2021 04:04:12 GMT

That makes perfect sense. Thanks a lot:)

By the way, if I has a loss in stock, can the capital gain in house sale adding up with the stock loss?

Re: cost basis of my rental house

ThomasM125 — Wed, 17 Mar 2021 12:21:01 GMT

When you sell the rental house at a gain, part of the gain will be treated as ordinary income, to the extent of the depreciation you deducted on the house. The remainder of the gain above that amount will be treated as capital gain income and you can deduct the loss on sale of stock from that amount.