Hello, I purchased a commercial rental property in 2012 for $900,000. The property was sold in 2016 for $1,000,000 in an installment sale with $500,000 down and the remaining $500,000 due from the buyer in a 6 year installment plan plus interest. There were no details in the sales contract in regards to the purchase price of individual assets within the property.
During my ownership of the property, I performed two improvements, one being a new roof ($24,000) in early 2015, and the other being a new fire alarm system ($7000) in late 2015.
I have claimed nonresidential real property depreciation on the building itself, the new roof, and the new fire alarm system since they were acquired.
Now, my questions are:
1) Because there was a capital gain on the entire sale of the property, but no individual sale prices for each asset in the sales contract, is each asset required to be sold for a capital gain? For ex, $25,000 for the roof and $8,000 for the fire alarm system, with the rest allocated towards the building minus land.
2) Can I link all the assets to a single IRS Form 6252? Or do I have to complete a Form 6252 for each asset because the acquisition dates are different for each asset? If so, how do I allocate the selling price and installment payments received between the assets? Since the buyer already put half down, do I just claim that I have received payment for half the selling price of each asset (as determined in Question 1)? For example, assuming the roof sold for $25,000, I would have received $12,500 in payment thus far as taken from the $500,000 total down payment.
Thank you.
During my ownership of the property, I performed two improvements, one being a new roof ($24,000) in early 2015, and the other being a new fire alarm system ($7000) in late 2015.
I have claimed nonresidential real property depreciation on the building itself, the new roof, and the new fire alarm system since they were acquired.
Now, my questions are:
1) Because there was a capital gain on the entire sale of the property, but no individual sale prices for each asset in the sales contract, is each asset required to be sold for a capital gain? For ex, $25,000 for the roof and $8,000 for the fire alarm system, with the rest allocated towards the building minus land.
2) Can I link all the assets to a single IRS Form 6252? Or do I have to complete a Form 6252 for each asset because the acquisition dates are different for each asset? If so, how do I allocate the selling price and installment payments received between the assets? Since the buyer already put half down, do I just claim that I have received payment for half the selling price of each asset (as determined in Question 1)? For example, assuming the roof sold for $25,000, I would have received $12,500 in payment thus far as taken from the $500,000 total down payment.
Thank you.