I sold my main home and rental property. Is this correct, I can only claim $250k exclusion on 1 main home? And not on both? I made $100k gain on each property Only the personal residence profit can be excluded.
rental property was jointly owned by parents with rights of survivorship. They both passed away in 2018. Property been on rental from 2018 - 2022. Does this mean I’m sole owner? Yes you are the sole owner. Have you not been reporting the rental on the Sch E all these years?
for rental property, do I just take gross proceed - cost of property - expenses for gain in 4797? If this has been reported on the Sch E then the property assets should have been depreciated and all of them need to be sold ... the sale will show up on the form 4797.
If you have been depreciating the property correctly all these years then here is a basic blueprint to follow :
Cost basis = purchase price + cost to buy + improvements
Adjusted cost basis = cost basis - depreciation taken
Sales price - ( cost basis + cost to sell ) = profit or loss
Profit - depreciation taken = cap gain
Depreciation is taxed as ordinary income not to exceed 25%.
Cap gain taxed at no more than 20%.
Ok ... a simple example of ratios ... if you have more assets than the example then you will have more lines. Remember if you divide a big number into a littler number you get a % ... thus 5000/100,000 = 5%
original cost basis ratios Sales price cost of sale
home 80000 80% 160,000 8,000
land 15000 15% 30,000 1,500
roof 5000 5% 10,000 500
totals 100,000 100% 200,000 10,000
All you need to enter into the program is the % of sales price & % of cost of sale for each asset being sold and you will have to do the math yourself as the program will not do it for you if you have more than one asset (the land & building are considered 2 assets) .
And if you have NOT been taking depreciation as required then RUN to a local tax pro when you file this return to get this error fixed correctly so you do not pay more taxes than you are required to do ... the form 3115 you need is not supported in the TT program and it is NOT a DIY project.
