topic How to Account for Demolition of Rental Property/Retained Land Value in Investors & landlords

How to Account for Demolition of Rental Property/Retained Land Value

Gill055 — Sun, 13 Feb 2022 19:53:01 GMT

I purchased a rental property in 2021 and demolished it the same year but I still own the land which was about half the value of the property. I'm using TurboTax for Business and am not sure how to correctly capture this transaction. I went to "dispose of rental property", then "dispose of it by some other means". Turbotax seems to have deducted the house value of the property but when I look at the 8825 worksheet I'm not sure it looks correct. I've entered 0 as the asset sale price and 0 as the land sale price. Also, on the tax return it looks like the full purchase price has been accounted for on line 2 for net real estate gain/loss. I'm not sure if I should be adding the land value as a separate asset to account for this? Thanks for any help you can provide!

Re: How to Account for Demolition of Rental Property/Retained Land Value

Mike9241 — Sun, 13 Feb 2022 20:15:32 GMT

the purchase price of the property less any depreciation allowed or allowable plus the cost of demolition becomes the tax basis of the vacant land.

this is something you'll have to do manually because there was no disposition for tax purposes of the building.

Re: How to Account for Demolition of Rental Property/Retained Land Value

Gill055 — Tue, 15 Feb 2022 20:06:01 GMT

Thanks for responding!