I received a 1099-s from sale of my LLC interest in a shopping center property, It included in Gross Proceeds the mortgage loan payoff. How do I handle the mortgage?

Forum|Forum|6 years ago
June 4, 2019
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I received a 1099-s form for the sale of my LLC interest in a shopping center rental property, It included in Gross Proceeds the mortgage loan payoff as well as the net cash I received. How do I treat the mortgage loan payoff amount when calculating the gain/loss? I actually incurred a loss after all expenses of the sale. I put in $255,000 and received $211,000 in the end but I did have ~$80,000 in accumulated depreciation, so I understand that this is recaptured, so net effect is about a $36,000 adjusted gain. So do I simply subtract the loan payoff amount on my tax form for cash proceeds?

TurboTax Premier Windows

Best answer by PatriciaV

No, the mortgage payoff is not included in the calculation of gain/loss on the sale. You may deduct mortgage interest that you paid on Schedule E. But the mortgage principal is not part of the sale.

PatriciaVAnswer

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john-heinAuthor

Thank you PatriciaV - so to be clear, when I fill in the "cash" sale amount on TurboTax, I don't use the 1099s figure anywhere, I simply subtract the mortgage amount paid off from the 1099s amount? Is this correct?

DaveF1006

Yes, if you offer a credit to the buyer for the closing cost, this should be subtracted from the sales proceeds. This means the seller will receive less net proceeds from the sale because the amount of the credit is deducted from the total sales price.

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