1) Can you only claim Capital Improvements made after the unit was put into service as a rental? (e.g. If I replaced heat pump while it was still my primary residence and not yet a rental, can I claim that as a Capital Improvement?)
"ALL" improvements done since your qcquisition of the property are added to the cost basis. Property improvements done before you converted the property to a rental "should" already be included in the cost basis. They could either be added to the original cost basis, or listed as a separate asset with the same in service date as the property, if done before the in service date.
2) For all of the Capital Improvements I've done to the condo (before and after it was put into service as a rental), for which I have all receipts, where do these get entered into TurboTax?
Again, if you've been doing things right in the past as you state, they are already listed in the program in the assets/depreciation section. If your heat pump done before you converted to rental isn't listed separately, then it "should" be included in the cost basis of the property.
Is there a Rental Sales Cost Basis Worksheet, for example?
There are two "unofficial" form 4562's in your tax return. They both print in landscape format. One is titled "Depreciation and Amortization Report" and is most likely the only one you'll use. The other is titled "Alternative Minimum Tax Depreciation" and is only used if you were required to pay AMT at any time during your ownership.
Some of the Capital Improvements which occurred when I lived their as my primary (e.g. the new heat pump) was never entered because it was not a rental at the time and there was no reason to enter it (e.g. I couldn't depreciate it, again, because it was my primary and not a rental).
It does not matter when the heat pump was installed; before or after converting to a rental. If you did not include it one way or another in the Assets/Deprecation section at the time you converted the property to a rental, yet you want to include it now to "increase your cost basis", you have a problem.
When you do not depreciate an asset as required, then when you sell that asset you are required to recapture the depreciation you *should* have taken, and pay taxes on that recaptured depreciation. So you still lose. The correct way to "fix this" is to file IRS Form 3115. While that form is included in the TTX program, it is not simple by any stretch of the imagination. That's why you need to seek professional help. Doing the 3115 wrong can (and will) put you in a never-ending nightmare with the IRS, from which you will never awaken.
I am sure that others have had this exact situation.
Many have.... and as far as I can tell by their responses, a vast majority (if not nearly all) of them took the advice provided and sought out professional help.
