topic asset vs land AND business portion for sold rental house in Deductions & credits

asset vs land AND business portion for sold rental house

SRS123456 — Sat, 18 Jan 2025 02:48:48 GMT

I bought and lived in a home from May 2006 - February 2013, then moved out and rented it out to tenants from February 2013 - Sept 2024, and then I sold the rental. Turbo tax is asking for asset sales price and expenses (business portion only) as well as land sales price and expenses (business portion only). Would the business portion consist of the percent of years/months that it was rented? So roughly 60% would have been the business portion with 40% as the non-business portion?

Also, how does one break up the value of the land vs the value of the house? I sold the house for 200K. Land value according to the county in 2024 was 43K, but the assessed value was 228K, which would be 19%. Would I be justified in applying the same percentages for my sale, which would make it 37720 for land and 162280 (and if I apply what I stated above, would make the business portion ~97368 for the asset and 22632 for the land?) I appreciate the assistance.

Re: asset vs land AND business portion for sold rental house

AmeliesUncle — Sat, 18 Jan 2025 03:48:33 GMT

For real estate, treat it as 100% business property (non-real-estate is treated differently). The program makes it confusing when it says that.

The only possible 'catch' is if the Fair Market Value in 2013 (when it was converted to a rental) was LESS than your Cost. The housing market crashed in 2008-ish, so that could be the case. If that was the case, were you depreciating the Cost or the FMV?

Yes, that is a logical way to determine the price of land vs building.

Re: asset vs land AND business portion for sold rental house

SRS123456 — Sat, 18 Jan 2025 17:10:58 GMT

Thank you so much!

Regarding the value of the house over time and the 2008 crash....

In 2006 at purchase: bought for 144K. house assessed by county at 106978 and land at 20K = 126978

In 2013, year first rented, it was assessed by county at 101390, with the land at 24K = 125390 (so $1588 diff)

We have never claimed any appreciation, so does the above information change how I would put data into turbo tax?

Re: asset vs land AND business portion for sold rental house

AmeliesUncle — Sat, 18 Jan 2025 18:58:02 GMT

@SRS123456 wrote:

We have never claimed any appreciation, so does the above information change how I would put data into turbo tax?

If you have never claimed depreciation for the rental, you should go to a tax professional that is experienced with Form 3115 to file your tax return for this year. TurboTax is not set up to do that for you and it can be complicated.