1099-s

[tanlongpham]

Hi there,

If the Title company did not send me a 1099-s form on a sale of a property, is that mean they did not send 1099-s to the IRS also?  The net of sale was less than $250000 (I'm single).

Thanks

[pk]

@tanlongpham ,  that would be generally be true  but please make sure that the title company  indeed did not issue a 1099-S ( to you and to the IRS ).

[DavidD66 · Accepted solution]

If it was your primary residence and the sales price was less than $250,000, they probably didn't send one to you or to the IRS.  Of course there's always a chance they did send them, and yours was lost in the mail.  It won't hurt to report the sale on your tax return anyway.  

[DavidD66]

If it was your primary residence and the sales price was less than $250,000, they probably didn't send one to you or to the IRS.  Of course there's always a chance they did send them, and yours was lost in the mail.  it won't hurt to report the sale on your tax return anyway.  

[tanlongpham]

I reported the sale as a rental with Long hold, the tax owe jump to $80K. I don't thing that is correct. What am I missing?

[Affordabletaxes2021]

Look at your closing package. The 1099S is likely to be in there with other closing documents. 

[KrisD15]

When you sell rental property , there usually are two types of income generated. 

First, Depreciation Recapture which is "Paying Back" the depreciation that you realize on the sale

Next, Capital gain if you sell for more than what you purchased the property for. 

Depending on the time it was a rental, the depreciation for that time, the original basis (cost) and the adjusted basis (cost less depreciation) the sale will result in these types of incomes. 

Depreciation Recapture is reported as Ordinary Income

Sale proceeds over original cost is Capital Gains. 

@tanlongpham 

[pk]

@tanlongpham , while agreeing with the  good explanation provided by @KrisD15 , just would like  clarify things a bit more on this depreciation  and its effects:

(a) for a residential rental property  ( no matter how acquired), you are allowed to "book" a depreciation amount based on the value of the depreciable portion of the asset  over a period of 27.5 years.  The value of the building  and its contents each may have a different class life.  The land underneath the house is not depreciable asset.

(b) Whether you recognize the allowable depreciation or not  ( it generally  lowers your tax on the rental income as negative amount ), the  yearly and allowable depreciation  accumulates --- this is called  accumulated depreciation of the property.

(c) When you sell the property and come back to your books :

The gain/ Loss on the property is based on difference between  Proceeds of the Sale  and  Adjusted Basis.

Adjusted Basis is the sum of   Acquisition  Price + plus Cost of Improvements over the years LESS Accumulated Depreciation.   Thus Depreciation lowers your basis.

Proceeds of the Sale is Sales Price LESS Sales Expenses  ( such a  RealEstate Commission, Transfer Taxes , Sales Prep Expenses etc. ).

When you have a Gain, the part of the Gain that is Equal to  Accumulated Depreciation is treated as Ordinary Gain  -- normal tax rate ( marginal rate ).  The rest of the Gain is given tax preferred treatment  -- Capital Gain Tax rate  --- anywhere between  zero and 28%.

Does this  explain your situation ?

Is there more I can do for you ?

[tanlongpham]

Hi PK

Thank you for your detailed response. I don't know how to figure out the Adjusted Basis. I don't have the all the records of all the repairs made over the years to the house. I think I have to contact Turbotax for expert help in filing my taxes this year.

thank you

[DianeW777]

It's all right to include a reasonable figure for any capital improvements you made to the property such as a new kitchen or a new roof without actual receipts if it's evident those improvements were made. You must also account for the depreciation you could have used on these as well

Depreciation is quite simple to calculate if you know the year you placed the property in service and when you stopped renting it. The chart for all years is included below and you simply add the percentages for all years then multiply it by the original cost of the building (not the land) to arrive at the total of depreciation used, or expensed on your returns over the years.

If you still feel you need assistance, you can use TurboTax Live:  How to switch to TurboTax Live

[pk]

@tanlongpham , I just wanted to make sure  you understood  that the adjusted basis is affected  by cost of improvements  and NOT repairs.   Repairs are included as expenses  on your Schedule-E  each year to offset the rental income while Improvements ( things that increase the value of the property ) are depreciated and accounted for when you dispose off the property.

I understand your desire to seek professional help  .

Is there anything more one of us can do for you ?

pk

[tanlongpham]

I hate taxes! I'm even more confused. 😩

[tanlongpham]

Hi Diane,

Thank you for your response. I'm way over my head regarding my sold rental in AZ.  I think I have to consult TurboTax expert on this one. The chart you sent is just a bunch of numbers to me😁. I have no clue what I am looking at. I hate taxes.

[tanlongpham]

I contacted the Title company and they emailed 1099-s. Now I need to figure out on how to claim that $250000 allowance to offset the CG tax

[JohnW152 · Accepted solution]

To enter the sale of your main home and claim the exclusion in TurboTax Online:

1. If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Income & Expenses on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit. 
   • Otherwise, in the left pane, select Federal, then Wages & Income (This is labelled Income & Expenses in TurboTax Self-Employed)
2. Scroll down and select the Show more dropdown to the right of Less Common Income
3. Select  Start or Revisit to the right of Sale of Home (gain or loss)
4. On the  Sale of Your Main Home page, read the information in the Click here to see if you have to report the sale link to the right of Did you sell or have your home foreclosed in 2022?  This will help you determine whether or not you need to report your home's sale.      If you do, select Yes
5. Enter all relevant information on the ensuing pages
6. Be sure to answer correctly on the Time You Lived In Your Home page.  This and subsequent pages determine whether you qualify for the exclusion.    
7. When you're done with inputting this part of the interview, the Exclusion of Gain screen will tell you whether your gain has been excluded

You'll need to know:

• The date you sold your home, and the selling price of your home.  These can be found on your closing statement
• The date you bought your home and the purchase price.  This, too, can be found on your closing statement
• The cost of any major improvements you made, so the program can deduct them for you

@tanlongpham