I bought a house this year to rent to my parents and aunt. I do not live there. I have always done my taxes myself before and really want to still do that unless it's too complicated. I am using H&R block online. It asks for "Property's total basis" and then "Basis for land only". It says this is Form 4562.
I researched some and I see that for the total basis you add the cost of buying it, the settlement costs, taxes you paid then, etc. I could figure this out. But I can't really find info about how to find the "basis for land only". I bought a house so the total cost was land and house included. One page mentioned it showing the amount for the land only on the real estate bills but I thought that was the total amount. Someone else said look on the mortgage appraisal but that only shows the full amount also, not with land separate.
I understand the purpose is to separate the land, which does not depreciate, from the property which does.
I just need to know how to find a number to put in for the land.
Added (1). Since I just bought this house in Nov, I do not have any real estate bills to check. However on my own house, it does not give a land value, just a total value. So most likely it would show the same.
I am charging rent to these relatives and the rent comes up to be $200 less than what the mortgage appraisal had listed as their rental amount. Is that still fair market value? Since for this year I only rented it 44 days since I just bought it in mid Nov, I think I'm fine with that. But for 2014 I'm not sure how it will go as $200 x 12 adds up to more of a difference…
Read more: How to determine the basis for land only separately from the property's total basis on schedule E?
