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Question

How to caculate Fair market value for rental property for first time?

Forum|Forum|2 years ago
March 6, 2024
1 reply
0 views

Hello,

I purchased the house in 2014 for $500,000 ( Land value was 95,000 and remaining was Improvements).

I rented the house in 2023 (last year 1st time) if I sell that house at that time it would be around $850,000 (estimates from Zillow and Redfin)

How do i calculate Fair market value ? Which provides breakdown for Land and Improvements?

TT is very confusing in navigating this.

Regards

R

TurboTax Premier Online

Since FMV of the property is greater than your cost basis back in 2014 + subsequent improvements, for tax purposes you use the cost for depreciation of the building and improvements, not FMV. Only if FMV was less than cost would that be used.

Fresher_TTUAuthor

Thanks for your answer. One follow-up question. I am in the tax bracket 22% will i get 22% of depreciation in my rental income or what % of the amount will be reduced in my rental income?

Regards

R

Perhaps, Your income has taken you up through the 10%, 12% and up to the 22% tax bracket.

As you apply the deductions to your income it may drop below the 22% bracket.

So in 2023 for a married couple: If you drop below $89,451 of income, you will be in the 12% bracket.

For a single taxpayer

$0 to $11,000 - 10%

$11,001 to $44,726 - 12%

$44,726 to $95372 - 24%

For Married Filing Jointly

$0 to $22,000 - 10%

$22,001 to $89,450 - 12%

$89,451 to $190,751 - 22%

Please contact us again with any questions.

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