Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-21-2014, 02:35 AM
Junior Member
 
Join Date: Feb 2014
Posts: 1
How do I fill out Tax form 4797 after sale of a rental property?

Hello all,

I am trying to figure out how to fill out form 4797 for the tax year 2013. The duplex was purchased in 2007 for $240,000 and sold in 2013 for $251,900. It was used as a rental property the entire time and was never owner occupied. Here are the facts............

- Purchased in 2007 for $240,000 (Land: 50,000 Building: 190,000)

- Sold in 2013 for $251,900

- Fees associated with sale of the property: $13,500

- Depreciation over the 6+ years: ~$34,000

- No improvements were made to the property during this time


For line 20 (of form 4797) I put 251,000. I assume this is correct.

My questions is what do I put for line 21. Do I put the original cost of the building and land plus the fee's associated with the sale? Or is it just the building value (at time of purchase, plus associated fees).

Where I am confused is that I am not sure whether to count this as 1 sale (building and the land combined) or 2 separate sales (building and land), and how this relates to "Part I" of form 4797.

Any help would be greatly appreciated! Thanks!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-21-2014, 08:13 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,127
Quote:
Originally Posted by bigbarr25 View Post
Hello all,

#1;I am trying to figure out how to fill out form 4797 for the tax year 2013. The duplex was purchased in 2007 for $240,000 and sold in 2013 for $251,900. It was used as a rental property the entire time and was never owner occupied. Here are the facts............

#2;- Purchased in 2007 for $240,000 (Land: 50,000 Building: 190,000)

- Sold in 2013 for $251,900

- Fees associated with sale of the property: $13,500

- Depreciation over the 6+ years: ~$34,000

- No improvements were made to the property during this time


#3;For line 20 (of form 4797) I put 251,000. I assume this is correct.

#4;My questions is what do I put for line 21. Do I put the original cost of the building and land plus the fee's associated with the sale?


#5;Or is it just the building value (at time of purchase, plus associated fees).

#6;Where I am confused is that I am not sure whether to count this as 1 sale (building and the land combined) or 2 separate sales (building and land), and how this relates to "Part I" of form 4797.

Any help would be greatly appreciated! Thanks!

#1;You must then recapture the unrecaptured depre so called sec 1250 recap in part 3 form 4797; the unrecap depre ‘d be taxed at 25% aslongas your marginal tax rate is 25% or higher; if not it’d be taxed as your tax bracket. ALSO UNLESS you have gain on sale of the rental home, you do not need to recapture the unrecap deprec on your rental.,

#2;So your adj basis(original cost/basis) is $219.5k;$240K-$34K+$13.5K


#3;correct;$251.9k needs to be reported here; the amount reported here is your gross sales price including money, the FMV of other property received, and any existing mortgage or other debt the buyer assumes or takes the property subject to. as you sold the property for $251.9K and the adjusted basis was $219.5K, the capital gain is $32.4K as the LTCG of $32.4K is smaller than your accum deprec of $34K, you must pay tax 25% on $32.4K aslongas your marginal tax rate ‘d be 25% or higher .

#4;correct, $253.5k;you need to report the oc of the DEPRECIABLE part,I mean b/d , land, the costs. Then in line 22 , you must report $34K, the whole accum depre and you must report , in line 23, adj basis,$253.5K-$34K=$219.5K in line 24, you must report$ 32.4K;$251.9k-$219.5k

#5;as mentioned above.
#6; I guess TOTALLY CRITICAL QUESTION !!!!!! one sale; sec 1250 ordinary gain rule applies on to the depreciable b/d NOT on land.you must report the recap sec 1250 depre on form 4797 line 13 Part and 1040 line 14



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 02-21-2014, 11:34 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,127
Note that line 26 relates to ordinary income recapture and does not apply to your sale. Instead the 1250 recapture is used when applying the tax rates using SchD/8949 I guess.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Help with Form 4797 and sold rental property for a loss millironzb Rental Real-Estate 8 02-04-2014 06:00 PM
Rental improvements only - how to fill out form 4562 for depreciation JackieGrant3014 Rental Real-Estate 1 01-06-2014 12:47 PM
Can Suspended Losses from Rental Property converted to Personal Residence be released upon sale of another rental property? mountainaire Rental Real-Estate 1 04-05-2011 03:59 AM
1245 or 1250 property to report on Form 4797??? sima24 Rental Real-Estate 2 02-27-2011 01:13 PM
1245 or 1250 property to report on Form 4797??? sima24 Rental Real-Estate 0 02-26-2011 10:43 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning