I have a client that sold his house last year. In 2003 he built a shop to use in his carpentry business, the shop is not attached to the house. He started depreciation on it in 2003. In 2005 he stopped his carpentry business, and sold the house w/ the shop. He was using the shop 100%, it cost him $23,112.00 to build. How do you allocate a selling price when there is none seperately stated? I could I report the sale using $23,112.00 as the selling price to recapture only the depreciation taken?
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Let us say the house cost 1$100,000. House plus shop cost is $123112.Originally posted by Absolut
Sales price = $200,000.Therefore selling price of shop = $200,000 divided by 123112 x 23112=$37546. You prorate the selling expenses the same wayEverybody should pay his income tax with a smile. I tried it, but they wanted cash -
Thank you Country Boy..
Thank you for the info, I understand now.Comment
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Fmv
I would suggest using FMV of the house at the time the shop was built instead of their cost. Absolut didn't say when the house was purchased -- could've been 5 or 50 years ago, and 2003 FMV could be quite different than their cost. If nothing else, have them look at their property assessment for 2002 or 2003 before the shop was built. The math calculations would then be done the same way.Originally posted by BRIAN
BillComment
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House w/ Shop used for Business
House was bought on 11/1/83 for $39,000 they did extension renovations of over $40,000.00, but client through back up away b/c I hadn't asked him for the info yet. I told him he shouldn't have thrown it away b/c you have to keep that stuff for tax purposes. I think I'd better at the point to have him look at old tax bill for 2003 vs 2004 to see what vaulations changed. Thank you.Comment
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