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taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 714
Experience:  Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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When accounting for the sale of a rental property, is there

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When accounting for the sale of a rental property, is there a way to determine which portion of capital gain is allocable to the land and which to the building without a formal appraisal? Is there a presumption, for instance, that capital gains are allocable to land since structures tend to depreciate over time?

Hi! Welcome to Just Answers! Thank you for the opportunity to answer your question! I will do my best to help!


Short of an appraisal, or a separate contract for the land (I have seen that done before) or a clause in the sales contract (I have seen this as well) you need to have some reasonable basis for allocating the sales price to the land. One possible way is to look at your current property tax bill. Often the tax assessor lists the value of the land separately form the value of the improvements. This is one method that I have been successful with on tax returns. There is no such presumption about land vs improvements.


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Thanks again! Have a good night!

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