allocating sale price between land and house on a 100% business rental

Forum|Forum|3 years ago
April 9, 2023
2 replies
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Why must I allocate between land and house; the sale was one entire Value - they did not separate out the amounts by land and house. If I do this on some arbitrary basis - isn't it apt to affect the gains and how they are treated? Is there a place that I can simply enter the total sales price for a 100% business rental?

Carl11_2

Employee

You allocate the same way you did between the structure value and the land value.

So if your total cost basis in the property is $100,000 and you allocated $30,000 to the land, that's 30% of your cost basis. Therefore you'd allocate 30% of our sales price to the land.

Mike9241

if you don't allocate to land then the cost of the land will not be taken into account when computing your gain so in effect you'll be using zero for the cost overstating your gain.