Sold Rental Property and Received 1099-S, how to divide sale price between building and assets that were depreciated.

Forum|Forum|4 years ago
March 24, 2022
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I need some advice here. I sold my rental apartment property in 2021 for $120K. I broke down the sale between building and land, building sale portion comes to $114K Land sale $6K because when I bought the rental property back in 2004, I had building and land broken out on my depreciation.

Total Purchase Price: $105K ( back in 2004) - allocated $100K to Building and $5K to Land. My question is I have several assets that I depreciated along the way. Appliance $6K, Improvements $6200, Refrigerator $519, Carpet $950, Refrigerator $455, Stove $538, Refrigerator $481, Carpeting $1625, Carpeting $1336. All the items listed above has been fully depreciated. How do I properly divide the Sale Price of $114K between the building and those assets listed above? What ratio would I use? There definitely will be a gain, so I know I be taking tax, I am trying to make sure I allocate the sale price properly to the building portion and the rest to the assets, that will total the $114,000. Additional information. I did depreciate the building as well, from 2004 to 2021 and I do understand about the recapturing part of that as well. Just not sure how to breakdown the sale between the building and the individual assets that were listed on the depreciation worksheet. Also, what section on Form 4797 would I list the appliances, improvements, carpeting? Would it be Part I or Part III. Thank you in advance for your assistance.

TurboTax Home & Biz Windows

MAK70

You should have a depreciation schedule with a list of all assets that you depreciated. You can use the total of any assets included in the sale of the apartment building, then take the depreciation basis of each asset and divide by the total proceeds to get a percentage amount. You then apply the percentage to the proceeds to get the allocation of the sale proceeds.

taxesohmy2017Author

Employee

Thank you, Mary for your prompt response. Can you elaborate a bit more. I will provide you with a few numbers from my detail list and please let me know which numbers I should divide with what.

Total Cost or other basis = $123,283 ; Basis Total: $116960; Accum Depr: $73842;

On the depreciation work sheet here a few items listed

Appliances - Cost Basis $6K; Basis $6K ; Accum Deprec $6K

Improvements - Cost Basis $6200; Basis $6200 ; Accum Deprc = $3591

Refrigerator - Cost Basis $519; Basis $519 ; Accum Deperec = $519

Carpet - Cost Basis $950; Basis $950; Accum Deprec = $950

Building - Cost Basis $100K; Basis $100K; Accum Deprec = $59237

These are just a few items.

Sale Price was $120K, however I allocated that between the building and land; Building was allocated $114K and Land $6K.

Can you please demonstrate one example using the data I provide above? Thank you

Critter-3

Ok ... a simple example of ratios ... if you have more assets than the example then you will have more lines. Remember if you divide a big number into a littler number you get a % ... thus 5000/100,000 = 5%

original cost basis ratios Sales price cost of sale

home 80000 80% 160,000 8,000

land 15000 15% 30,000 1,500

roof 5000 5% 10,000 500

totals 100,000 100% 200,000 10,000

All you need to enter into the program is the % of sales price & % of cost of sale for each asset.