Rental property sale allocation for amortized item

Forum|Forum|2 years ago
April 3, 2024
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I sold rental property in 2023. I understand the process of allocating sales proceed and sales expenses to land, building, and improvements. However, one of the depreciated items is categorized as "amortization": it is refinancing fees in my case. Does this item get the same treatment as the other tangible assets? Allocate sales proceeds and sales expenses and show a gain? It seems odd that you would "sell" and intangible asset such as this. Thanks.

Best answer by DianeW777

No, you do not allocate any selling price to the loan fees. There would be no gain or loss on this asset and you can indicate it was converted to personal use which should eliminate it from next years return. Since you have fully exhausted the expense there is not need to keep it in the return in the future.

@Steve230

KrisD15

Whatever is remaining for the points is claimed as a rental expense (interest) for the final year of the rental activity.

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Steve230Author

Thanks! However, the item is fully amortized, but that's good to know. Do you have any advice on my original question though? In regards to whether I should treat this item as an asset that is sold, allocating sales proceeds and sales expenses to it. I think not - it appears to be an item that got expensed over time but does not generate a gain or loss like the other assets.