What forms do I use for sale of residential rental property?

Posted by hr(bob) hofmann@att.net on October 3, 2009, 6:04 pm

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I have lurked here in the past, but have not been lurking for the last
9 months or so.

I am looking forward to the sale (hopefully) of one of my daughter and
son-in-law's two rental properties. I want to get a head start on
assembling all the paperwork I'll need for next tax season. I figure
this is the best place to start. I trust people here more than the
IRS web site, altho it is a good second choice.
Besides the back filed tax forms, so I know the total depreciation
taken over the years, what else do I need to assemble, and what IRS
forms will I need to fill out for them?

TIA,

Bob Hofmann

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Posted by Arthur Kamlet on October 3, 2009, 7:04 pm

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>I have lurked here in the past, but have not been lurking for the last

>9 months or so.

>I am looking forward to the sale (hopefully) of one of my daughter and

>son-in-law's two rental properties. I want to get a head start on

>assembling all the paperwork I'll need for next tax season. I figure

>this is the best place to start. I trust people here more than the

>IRS web site, altho it is a good second choice.

>Besides the back filed tax forms, so I know the total depreciation

>taken over the years, what else do I need to assemble, and what IRS

>forms will I need to fill out for them?

I always recommend seeking professional help when starting
or selling a rental.

Yes, you will need the accumulated depreciation, and it transfers
to form 4797. I'll also say form 4797 looks deceptively simple
yet generates a very large error rate. It's just so easy to
get wrong.

Keep track of each class of property -- Sec 1250 structure,
Sec 1231 land, sec 1245 appliances, etc. They go to different
parts of the 4797 and if you are selling appliances as part
of the sale, I would argue their portion of the sales price
corresponds to their adjusted cost basis, meaning no gain or loss
for those items. But be sure to allocate sales price amomg each
class of property.

If the rental was still in service during this year, keep on
depreciating and filing a schedule E

There might be a Pub on selling rental property but I can't
come up with one off the top of my head.

Good luck.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Posted by Mark Bole on October 3, 2009, 8:32 pm

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Arthur Kamlet wrote:

>> I am looking forward to the sale (hopefully) of one of my daughter and

>> son-in-law's two rental properties. I want to get a head start on

>> assembling all the paperwork I'll need for next tax season.

> I always recommend seeking professional help when starting

> or selling a rental.

Good advice.

Also check for passive loss carryovers. Keep track of expense of sale.
Check for any depreciation adjustments for your state or AMT.

-Mark Bole

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Posted by hr(bob) hofmann@att.net on October 4, 2009, 12:18 pm

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> Arthur Kamlet wrote:

> >> I am looking forward to the sale (hopefully) of one of my daughter and

> >> son-in-law's two rental properties. I want to get a head start on

> >> assembling all the paperwork I'll need for next tax season.

> > I always recommend seeking professional help when starting

> > or selling a rental.

> Good advice.

> Also check for passive loss carryovers. Keep track of expense of sale.

> Check for any depreciation adjustments for your state or AMT.

> -Mark Bole

Thanks Art and Mark.

Form 4797 was the form I was thinking of. Good point about treating
the appliances separately. There is only a stove as I remember. I
think the property is about a wash compared to their original cost, so
the depreciation will be the strongest influence on the capital
gains. But, they have had it for 10 years, so all of us will be glad
to be rid of it and the problems of dealing with tenants who are 3.5
hours away and who rarely pay the rent on time. Expenses of sale will
be appreciable as we have had to do a lot of "things" to enhance the
property to sell it in the current market.

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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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Posted by removeps-groups@yahoo.com on October 4, 2009, 6:45 pm

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wrote:

> Form 4797 was the form I was thinking of. Good point about treating

> the appliances separately. There is only a stove as I remember. I

> think the property is about a wash compared to their original cost, so

> the depreciation will be the strongest influence on the capital

> gains. But, they have had it for 10 years, so all of us will be glad

> to be rid of it and the problems of dealing with tenants who are 3.5

> hours away and who rarely pay the rent on time. Expenses of sale will

> be appreciable as we have had to do a lot of "things" to enhance the

> property to sell it in the current market.

Things you did to enhance the property are not necessarily expenses.
If they were improvements, they have to be depreciated, just like the
appliances. If they were repairs, then they are deductible as
immediate expenses.

No fridge?

When you say the property is a wash, do you mean the original purchase
price and sale price are the same, without regards to depreciation?
Some people say the cost basis is the original purchase price minus
the depreciation taken over the years, which would mean if you bought
the property for 100k and sold it for 100k you still have a gain.

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>