Sale of Rental Property

jaxaimeelee — Thu, 06 Jun 2019 07:53:17 GMT

How do I break down the asset sales price, asset sales expenses, land sales price, and land sales expenses? Where or can I write off the commission, title fees, and mortgage payoff? Do I work off of the sold price of the property or the due to seller amount?

The mortgage payoff is not part of it. It is purchase pri...

Coleen3 — Thu, 06 Jun 2019 07:53:18 GMT

The mortgage payoff is not part of it. It is purchase price, improvements, sales price, closing costs and depreciation.

The first step is to separate out the land. If the land has not gone up or down in value since your bought the property, use the same percentage as you did when you first entered it. The sales expenses are prorated by the building/land proration. For example If the entire sales amount is $400k and the land value of that is $100k, the 75% of the closing costs are allocated to the building and 25% to the land.

Basically, if you follow the guidance below, the program...

Carl — Thu, 06 Jun 2019 07:53:20 GMT

Basically, if you follow the guidance below, the program does 90% or more of the math for you.

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 ahve a selection on it for "I sold or otherwise disposed of this property in 2018". Select it. After you select the "I sold or otherwise disposed of this property in 2018" 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 it it's zero. Then you MUST work through the "Sale of Assets/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. Likewise if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically when working through an asset you select the option for "I stopped using this asset in 2018" 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.

topic Sale of Rental Property in Investors & landlords

Sale of Rental Property

The mortgage payoff is not part of it. It is purchase pri...

Basically, if you follow the guidance below, the program...