Where to enter expenses for the development & sale of land

Forum|Forum|2 years ago
April 11, 2024
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We live in the Florida Keys where there are strict requirements for land to be “buildable”.

In 2017 we purchased an empty waterfront lot for $340,000 classified as “vacant land”. We sold it as a buildable lot in 2023 for $800,000. In order to go from vacant land to buildable lot we incurred $126,500 in professional fees, inspections, contractors and permit fees.

I entered the proceeds from the sale of the property in “Investment Income” under “Stock, Cryptocurrency, Mutual Funds, Bonds, Other”. According to the help pop-up in TurboTax this is the correct place to enter the land sale. TurboTax gives me a place to deduct closing costs and commissions from the sale and generates a form 8949.

However, it doesn’t allow me to deduct the additional $126,500 in professional fees, inspections, contractors and permits on form 8949.

Adding these costs to box G “Amount of Adjustment” doesn’t feel correct. Where do I itemize these expenses?

Thank you

Best answer by zomboo

MarilynG1,

Those are exactly the steps I took. But I think I may see the problem.

I did not receive a 1099-S from the realtor, only a HUD-1.

What I did:

For "Proceeds" I entered the gross sale price ($800,000).

For "Sales Expenses" I entered closing costs and the 6% commission to the realtor ($66,469).

Should I have:

Should "Proceeds" be the net received after closing costs and commission and "Sales Expenses" ($800,000-$66,469=$ 733,531) ?

And "Sales Expenses" be expenses -- professional fees, inspections, contractors and permits ($126,500)?

If yes, where do I need to itemize those expenses or do I need to itemize them?

Thank you,

Jim

Since you didn't receive a 1099-S,

Proceeds will be Sale Price minus Commissions: $800,000 - $66,469 = $733,531

Total amount paid will be Purchase Price + Improvements: $340,000 + $126,500 = $466,500

That's it. The sales commissions are covered in the proceeds, so don't check the 'Additional sales expenses' on the next page, check 'None of these apply'. This section is when you have a 1099-S that doesn't reflect the sales expenses.

You don't itemize your improvement expenses anywhere.

zomboo

Closing costs and commissions on the sale are subtracted from the sale price. If this is not reflected on the 1099-S form received, enter 'E' in column (f) of form 8949 and an adjustment in column (g). The costs to improve the lot are added to your basis reported in column (e).

mcgeemarathonAuthor

zomboo,

Thank you. Where do I go in Turbo Tax to detail those costs so they appear on 8949(e)?

Thank you,

Jim

zomboo

You don't detail or itemize the costs on 8949, just the total. But keep records of the improvements with your records of the sale. Remember, you should only need to enter data in columns (f) and (g) if the proceeds from the sale shown on 1099-s don't reflect the sales commissions.