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GHarding01
Returning Member

Form 4797 Sale of Rental Property

4792 Line 21 seems to be calculating wrong or I need to change my cost basis of rental property I sold.

Rental property Cost  as per interview answers carried over from 2018 return- Asset $43,110, Land $16,890. Rental property sales  as input- Asset $52,560, Asset sales expenses of $669,  Land $20,440..  Part II calculates gain on sale of Land as $3,550. This appears correct.

Part III calculates a gain on sale of Asset of $ 27,657.  As calculated: Line 20 Sales price of Asset : $52,560. Line 21 Cost plus expenses : $26,889 (Cost $43,110 plus expenses $669 less $16,890).  Line 22 Depreciation of $1,986. Totals a gain of $27,657 (Asset sales price $52,560 less adj basis of $24,903 (Cost plus exp $26,889 less depr $1,986)

Why is the cost of Land from Part II $16,890 reducing the cost of Asset and how do I fix it?

6 Replies
MarilynG1
Expert Alumni

Form 4797 Sale of Rental Property

The cost of the land is not reducing the cost of the asset; the Accumulated Depreciation on the Asset is reducing the Cost Basis.

 

You entered a Cost Basis of the Rental at $43,110 and a Sale Price of $52,560; there's a Gain already without subtracting Accumulated Depreciation from the $43,110.  How many years have you rented the property?  The Depreciation of $1,986 you mention sounds like one year only. 

 

If you have rented the property for several years, you will almost always have a gain on the sale. 

 

Click this link for info on how to enter the Sale of Rental Property

 

This link has helpful info on Calculating Rental Property Depreciation. 

 

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GHarding01
Returning Member

Form 4797 Sale of Rental Property

The property was purchased in March 2017. About two years of depreciation.  I am expecting a gain but not $27K.

Total purchase price of property was $60,000 (43,110 for house and 16,890 for land) and sales price of property was $73,000 (allocated 52,560 for house and 20,440 for land).

MarilynG1
Expert Alumni

Form 4797 Sale of Rental Property

Yes, that sounds like about 9K and 3.5K gain, respectively, not considering Sales Costs.

 

Are there other rental assets also? You could delete all sale-related info and re-enter according to the link sent earlier. 

 

Unfortunately, we can't see your return in this forum.  There is no known issue with TurboTax calculating a rental property sale.

 

Click this link for instructions on How to Get a Live Review  if you can't resolve this. 

 

 

 

 

 

 

 

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GHarding01
Returning Member

Form 4797 Sale of Rental Property

This is the only Rental asset.  The calculation on Form 4797 Line 21 for Cost or other basis plus expense of sale is $26,889.  This is Purchase Price of $43,110 plus sales expenses of $669 less $16,890. Why the deduction of $16,890. Depreciation is taken on Line 22.

 

 

 

 

MarilynG1
Expert Alumni

Form 4797 Sale of Rental Property

In trying to re-create your scenario, the Depreciation on Line 22, Form 4797, links to the Asset Entry Worksheet amount on Line 36.

 

This amount is the total of two State Amounts, on Lines 63(l) and 63(m). 

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AmeliesUncle
Level 13

Form 4797 Sale of Rental Property

 

Was $43,110 the cost for ONLY the building?  Was was that the combined cost for building and land?  Or was the TOTAL cost (building and land)  $60,000?

 

Check through your entries.  When it asks for the cost, you enter the TOTAL cost (building and land) for both the purchase price and the sales price.  So if the TOTAL purchase price/Basis was actually $60,000, it sounds like that was your mistake.  *IF* that is the case, that also would mean you did not take enough depreciation, and you may want to amend the prior tax returns to correct that.

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