I originally purchased a townhouse in 2000 for $87500. It was my primary residence until 2011, at which time, it was converted to a rental property. I had tenants for 1/2 of the year for 2016. I had no tenants for 2017. Due to my divorce, I was forced to sell the property in June 2017. I am trying to enter my taxes, but I am having trouble as I do not have the original closing cost statement / settlement statement / HUD-1 document from the initial purchase back in 2000. I have contacted the real estate agent, title company, escrow company, and bank to see if I can get a backup copy. So far, no one has been able to help me out. What information (exactly) do I need from this form in order to correctly complete my taxes?
To report the sale of a personal residence converted to a rental, you will need to know your original basis and the total depreciation you've taken while the property was reported as a rental.
The basis for real property is the total of:
If you are unable to locate the closing documents for the original purchase, you will need to estimate your purchase cost and closing fees. A search of property tax records may help you confirm the purchase price. Most county tax offices have an online search capability that goes back at least 20 years. Contact your county clerk's office for more assistance.
A local Realtor should be able to estimate your closing costs based the selling price. If you made any major improvements either before or after you converted the property to a rental, you should have some records of those expenses.
Look for worksheets and forms in your tax returns from this period. Some of this information (like accumulated depreciation) should be included in your tax records.
Keep good records from the resources you use to determine your basis for the sale. You must be able to document your numbers if the IRS decides to take a closer look.
If you rented out the property in 2016, in order to correctly report that rental property income/expenses on your 2016 tax return, you had to have the cost basis of the property. So dig out your copy of your 2016 tax return and look for the IRS Form 4562 for that property. There are three of them for that property, and you want the one specifically titled "Amortization and Depreciation Report". Add together the amounts in the Cost (Net of Land) column and the Land column, and that's your cost basis of the property.
"So far, no one has been able to help me out. "
I can tell you right now, for an absolute fact, you're being fed a line of B.S. Apparently, all the places you enquired with for the HUD-1 statement are just flat out lazy, or else their extremely unintelligent. I will guarantee you that the bank has a copy of that HUD-1. They're required to have it for so long as the loan is active, by federal law. If they don't have it, then they have no basis to foreclose on the property if you just stop paying for it. Without that HUD-1, they have no proof of basis to remain as a lienholder on the property's deed/title. So I guarantee you they have it.
Now more than likely, it's not at the local office where you are physically going to, or where you actually went to apply for and acquire the loan. It's on file at the home office, wherever that may be. You can contact them and they will send you a copy, and you can expect to pay a small fee for that too. Remember, you were provided a copy at the closing, you lost it and now want a replacement. They're generally happy to oblige the request, but you should not expect it to be free.
Thanks for the reply. It turns out that the loan was refinanced, and the original bank is no longer in business. I have contacted the bank that I did the refi through, and they have made a request to their records retention group to see if they can get a copy of the HUD-1. They are telling me that they may not have it, as the refi took place several years ago.
Just keep in mind you need the original HUD-1, and not the one from the refi. Now if you still have the tax return from any of the years you rented it (preferably the one from the tax year you converted it to personal use) the 4562 in that return titled "Depreciation and Amortization Report" will have your original costs basis, which is what you need for reporting the sale correctly. Just add together the amounts in the Cost (Net of Land) and Land columns from that 4562, and that will give you your cost basis. Note that the total you get there has already taken into account any deductible sales expenses and the such, that were incurred and claimed on that original purchase.