@DianeW777—thank you. For the below, do I understand you right that if I missed including purchase closing or improvement costs, then there is no way to add them when I sell the house? I am not sure I understand. Also, improvement costs were done in year 5 after I bought the house (not at the time of the house purchase).
Capital improvements and purchase costs would be part of the cost basis of the house and eligible for depreciation. You would be required to calculate the depreciation that would have been allowed. This would be done by adding these assets to your rental activity, separately from the house, using the original date placed in service for rental and then calculating the selling price for those assets as well. You can use the same example provided in the other post.
And yes, you will lose that depreciation expense because it will be recaptured unless you use Form 3115.
