Confusion about selling rental home: Sales Information

Forum|Forum|3 years ago
February 7, 2023
2 replies
0 views

I'm trying to fill out data for the sale last year, of a rental house that I owned.

The page is labeled 'Sales Information', and has the following fields:

Asset Sales Price:
Asset Sales Expenses:
Land Sales Price:
Land Sales Expenses:

So on line 1 I put the Total Sales Price from the Seller's Final Settlement Statement (SFSS)
Line 2 = Subtotals from SFSS, representing all expenses.
Line 3 is confusing, though... I put in the value of the Land, from the county assessor's statement...
That immediately caused a *huge* jump in taxes due... but I don't understand it...

isn't the value of the land included in the Total sales price?? I wasn't paid separately for the land...
Am I over-thinking this??
Actually, I'm wondering if I have the basic Review Information incorrect??
They ask for cost, and then Land is listed separately, so I put in the Land value as shown on the property appraisal form... but that is actually included in the appraised value of the property, isn't it??
See image below... should I just set Land value to 0 ???

MAK70

Yes the land value is included in the sales proceeds. You do have to report the land portion separately, though because it is a rental property you took the depreciation deduction each year (which did not apply to the land). The best thing to do is subtract the land from the total selling price and subtract the proportion of the total selling expenses attributed to the land and adjust the asset amounts accordingly.

Carl11_2

Employee

I put in the value of the Land, from the county assessor's statement...

The county assessor's value is never used anywhere, when reporting the sale. You don't need that document from the county at all. (I'm guessing your property tax bill. You don't need it at all.)

I am assuming that the only asset listed in the property's Assets/Depreciation section is the property itself, and you have no other assets listed. If you do have other assets listed, then let us know because it matters, big time. So to simplify things for you:

- What you enter for Asset Sales Price and Land Sales Price must add up to the total sales price.

- What you enter for Asset Sales Expenses and Land Sales Expenses must add up to the total sales expenses.

derelictAuthor

Ahhhh... okay... that makes sense...

Actually, isn't the 'cost' field in the Review Information, used as the cost basis, to determine what my profit in the sale is?? Actually, I wonder if I should have originally subtracted the land value from that value, as well??
Anyway, thank you for that clarification!!

Carl11_2

Employee

In the screen shot you posted above, has nothing to do with the sale of the property. All that screen is showing, is what was imported from the 2021 tax return. I can't think of any reason what-so-ever, why you would change anything on that screen. Doing so can (and will) screw up the depreciation history big time.

The sale of rental property is reported in the Assets/Depreciation section of the rental property you sold.