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FOR A CPA OR TAX ATTORNEY WITH EXTENSIVE EXPERIENCE IN PROPERTY SALES: We purchased a piece of vacant land in 2009 and sold it in 2012 at a loss. We paid cash for the lot. We purchased the lot in an LLC (my wife is the sole member). We never did anything to the lot. We don't have any passive income. I am working on my 2012 taxes in Turbo Tax and it is asking me the following questions:
1. PROPERTY DESCRIPTION. Do I just put the address ("123 Main Street")? Or "Vacant Land"? Or "Vacant Land - Located atXXXXX? Or something else entirely?
2. NET PROCEEDS. What amount do I put here? Which amounts are included in the NET PROCEEDS (Turbo Tax just says, "The total amount you received from the sale, after subtracting commissions and fees)? Here are the details at settlement. SETTLEMENT FOR SALE OF LOT (2012): Sales Price: $500 Add: Credits (Assessments from 2/1/12 to 12/31/12): $1 Minus: County Taxes (from 1/1/12 to 2/1/12): $2 Minus: Sales Commission: $3 Minus: Attorney Fee: $4 Minus: Sales Tax/Stamps: $5 Minus: Estoppel Fees: $6
3. ORIGINAL COST. What amount do I put here? What amounts are included in the ORIGINAL COST (Turbo Tax just says, "The cost or basis of property is usually the original cost of the property, adjusted for various items after you acquired it.")? Here are the details at settlement. SETTLEMENT EXPENSES FOR PURCHASE OF LOT (2009): Purchase Price of Lot: $1000 Add: Title Insurance Binder: $7 Add: Title Insurance: $8 Add: Development Master Association Fees: $9 Add: Neighborhood HOA Fees: $10 Add: Neighborhood Working Capital Fee: $11 Add: Estoppel Fee: $12
4. Do any of these other fees factor in? Turbo Tax didn't ask for any expenses spent between the purchase and sale of the lot. 2009 FEES PAID: Property Taxes: $13 Storm Water/Utility: $14 2010 FEES PAID: Storm Water/Utility: $15 Neighborhood HOA Fees: $16 Development Master Association Fees: $17 Neighborhood Working Capital: $18 2011 FEES PAID: Property Taxes: $19 Development Master Association Fees: $20 Neighborhood HOA Fees: $21 Storm Water/Utility: $22 2012 FEES PAID: Property Taxes: $23 Neighborhood HOA Fees: $24
5. Since we purchased this property in an LLC, do we also need to also file a Schedule C?
All but property taxes, assessments, interest and reserves will count for cost of selling or buying.
1. Put anything you like for the description - address, words, etc all the same.
2. 482=500 - 18 (18 from Sales Commission: $3 Minus: Attorney Fee: $4 Minus: Sales Tax/Stamps: $5 Minus: Estoppel Fees: $6)
3. 1057=1000 + 57 (57 from Title Insurance Binder: $7 Add: Title Insurance: $8 Add: Development Master Association Fees: $9 Add: Neighborhood HOA Fees: $10 Add: Neighborhood Working Capital Fee: $11 Add: Estoppel Fee: $12)
4. Fees while you owned it do not count unless you made an election with the return to save these up for use at sale (Sorry too late now ) Property tax would be a deduction if itemizing but likely not enough to merit an amended return. Add the current year paid into property tax paid in deduction section if you will itemize.
5. This is not on Schedule C since this is not a business of your wife. This is on 8949 and Schedule D as the single member LLC is ignored.
Of course, this is your return and you need to decide how to fill out the information.
My answers are only based on what I would do with what you have told me here.
Please ask if you need discussion or clarification.
You mentioned that property taxes would be a deduction if itemizing. We are itemizing for 2012. So, any property taxes paid for the lot in 2012 would be a deduction? Where would this go on the tax return?
It will go in the same section as the property tax on your home.
Exactly where depends on the version of TurboTax but it will be in the Deductions and likely called property tax.
Hope that clarifies for you.
Please ask if you need more help.