Sale of Rental Real Estate

Figuring out the basis

When selling rental real estate, it is important to figure out the basis of the property.

Here is how it works:

Sales price

Minus Purchase price

Minus the total of all accumulated depreciation taken on the property (or not taken but were entitled to)

Plus, the costs of capital improvements and fix up expenses to get it ready for sale

Minus the depreciation taken on those improvements

Plus, the costs of sale including the agent’s commission

Plus, any deferred unused passive losses on that property

= your basis