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    Petersgb's Avatar
    Petersgb Posts: 3, Reputation: 1
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    #1

    Dec 4, 2007, 12:37 PM
    Installment sale
    Why does Turbo Tax ask for the selling price of an rental realestate asset and the selling price of the land separately when in fact the closing papers of the sale don't distinguish between the two. If you do enter the gross selling price for the complete property and zero for land Turbotax comes up with an error. Note the IRS in the 6252 instruction sheet and the 4797 instructions never asks for the separation of the two entities. Does Turbo tax have a bug?
    Mobea's Avatar
    Mobea Posts: 220, Reputation: 15
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    #2

    Dec 5, 2007, 08:22 AM
    The reason for this is because land cannot be depreciated. The house can. This could affect the basis of the rental house. You can check your local property tax comptroller to get a breakdown on land and improved property basis.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Dec 5, 2007, 01:12 PM
    Mobea has it right. I have nothing to add.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #4

    Dec 5, 2007, 10:46 PM
    Out of your profit from selling the rental property, the amount equal to the depreciation for all the years the property was with you is ordinary gain and the rest is capital gain. Ane the land never depreciates, it is the building/structure that depreciates.
    Mobea's Avatar
    Mobea Posts: 220, Reputation: 15
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    #5

    Dec 6, 2007, 05:05 AM
    Petersgb
    Are you selling this property as an installment sale (owner financing) as your title suggest? There is different method used to account for this for tax purposes.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Dec 6, 2007, 02:01 PM
    If you ARE doing an installment sale, RUN (don't walk) to an experienced tax professional to do your tax return.

    Using TurboTax in this case COULD be a classic case of GIGO (Garbage In, Garbage Out).
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