How to enter 1099-S for partial sale of investment property?

Forum|Forum|3 years ago
February 4, 2023
1 reply
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I received a 1099-S from the state for seizing a strip of land from my rental property to widen a road. How do I enter the 1099-S? Turbo Tax seems to only offer a entire sale option, but the rental property itself is untouched. I saw another post where it recommended to log this as an investment sale, but how can I decrease the basis in the land for the asset in Turbo Tax? It shouldn't affect the depreciation since only land was taken?

Carl11_2

Employee

You can decrease the value of the land without affecting the depreciation on the structure. Just work through the asset.

Reduce the cost of the land in the COST OF LAND box, by the percentage of the land that was sold. Then reduce the amount in the COST box by the same exact amount. Then you'll report the sale in the investments section.

Example.

COST: $200,000

COST OF LAND $50,000

The program (not you) figures the depreciable value of the structure at $150,000

Say you sold 10% of the land. Ten percent of $50,000 is $5000. So reduce the land cost by that much and the total cost by the same amount.

COST: $195,000

COST OF LAND: $45,000

Simple math shows the value of the structure is unchanged at $150,000

If you sold the land for $10,000, then when you report the sale in the investments section you'll have a cost basis of $5000, which will give you a $5,000 taxable gain.

MelissaJaenke

I'm trying to help my 88 year old mother with this same issue. Do I enter the information under 1099S on turbo tax or under a different area. I did not find the line items you mentioned in your reply while looking at where they want me to enter the 1099S. Do I just go to the investment section and not enter it under where turbo tax says a 1099S goes?

Thank you for any/all help with this

RobertB4444

If the property that your mother sold a piece of was part of her rental property then follow the steps that @Carl11_2 has laid out for you. If the property that your mom sold was a piece of her home then you will enter it under 'Less Common Income' and 'Sale of Home'. Follow the steps to sell off a piece of the property.

@MelissaJaenke

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