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Partial sale of property, County purchased 5' of my property - TurboTax Support:
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The IRS gets a copy of that 1099-S, so they expect to see it reported on your return. You have two choices. I would use #1, although #2 is what the IRS probably thinks you should do
1. Report the gross income (see below for how to enter) then show the same amount as your basis, for a net gain of 0. On your own records, reduce your cost basis by that amount for future sale.
2. The portion that is "damages" (the tree) is only a reduction in cost basis. You have to estimate or guess what the cost basis in the land that was taken is. The cost basis you show on your tax return is that number plus the damages portion of the 1099. Your real estate tax bill is a good place to start. For example if the tax bill says 25% of the total assessment is for land, and you sold 10% of your land; then a good estimate of your cost basis is: 0.25 x 0.10 x original purchase price. You reduce your cost basis in the remaining property by the amount you claim as basis on this "sale".
There is a a tax exclusion for the sale of a home, or partial sale. So, even if you go thru the complicated procedure for #2, you end up owing the government nothing.
TurboTax does not have an entry point for a 1099-S (other than home sale). So, for option #1 In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Investment Income
-Stocks, mutual funds, Bonds, Other (Real estate is other)
For option #2, type> home - sale of home <in the search box
1. Report the gross income (see below for how to enter) then show the same amount as your basis, for a net gain of 0. On your own records, reduce your cost basis by that amount for future sale.
2. The portion that is "damages" (the tree) is only a reduction in cost basis. You have to estimate or guess what the cost basis in the land that was taken is. The cost basis you show on your tax return is that number plus the damages portion of the 1099. Your real estate tax bill is a good place to start. For example if the tax bill says 25% of the total assessment is for land, and you sold 10% of your land; then a good estimate of your cost basis is: 0.25 x 0.10 x original purchase price. You reduce your cost basis in the remaining property by the amount you claim as basis on this "sale".
There is a a tax exclusion for the sale of a home, or partial sale. So, even if you go thru the complicated procedure for #2, you end up owing the government nothing.
TurboTax does not have an entry point for a 1099-S (other than home sale). So, for option #1 In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Investment Income
-Stocks, mutual funds, Bonds, Other (Real estate is other)
For option #2, type> home - sale of home <in the search box
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