Split out

[BWK]

I have a situation where I had land and house that belonged to me. I had rented the house for approximate 3 years and decided in January to removed it from rental and made an attempt to sell both house and land. I actual sold most of the land and retained the house with a couple of acres. I was able to pay the first mortgage off and refinanced the house and two acres in October. How should I proceed showing partial sale and refinancing of the remainder? 

[RobertG]

You should report the sale of the land only.  The refinancing will not be shown on your return, just deduct the home mortgage interest payments.

To report the sale, you need to figure your basis in the land sold.  Your basis is generally what you paid for the land, or the value of the land at the time you bought the property.

If you look at your property tax bill for the time before you sold the land it will show the value of land and improvements.  You can use this ratio to estimate the value of the land at the time you bought it. Since land does not depreciate, none of your prior year depreciation is attributable to the land sold.

[Edited 01/24/2020|8:31 PST]