Yes, I am starting to see that. 😐 I have been looking through the 1031 posts, all w/good questions, good info.
As I am trying to at least capture the basics, here is what I am running into...
Situation
- Purchased one investment property, straight forward. Purchase was Q4 2019, not rented until 2020.
- Purchased one investment property via 1031 Exchange. Purchase was Q4, 2019, not rented until 2020.
- Each property had upgrades and such added in 2019 and 2020 prior to being rented.
Plan
- Add both properties to Schedule E for 2019 return.
- Assets for would be added to 2019 return with NO inservice date. Inservice dates to be added for 2020.
- Mortgage interest, taxes for said properties would be added to Schedule E.
- Capitalize those improvement expenses as part of the basis for each of the properties.
Hiccups
- TT wants to delete the properties from 2019 return, as they were not rented.
- 1031 Exchange via TT <Like-kind> does not seem to connect to relinquished nor acquired properties
Questions
- Where and/or how are those expenses capitalized in TT?
- In addition to those hiccups above, there appears to only be one field for Basis in the 1031 exchange. This does not seem to calculate or even reference any of the data from prior years on improvements. Had the property over 10 years, there has been a lot of work over the years. Am I expected to pull out a pad & pen and comb through over a decade of data to calculate?
- At the end of the Like-kind process, TT displays the basis of the new property. Well, not seeing how I can add in the 2019 improvements for the new purchase basis. Would that 'basis' field be inclusive for BOTH properties, add in expenses from both sides (I don't think so, that wouldn't be right.) How would I adjust the basis of the new property to include improvements?
- Based on the info so far, we are instructed NOT to state we 'sold' the investment property, because the exchange process is not a sale. Got it. Now what happens, though, to the Schedule E and such for 2020 taxes? Do we just DELETE the sold property when processing 2020 tax return?
- Presuming the relinquished property is removed from the 2020 return, what connects the 1031 to the new property for the 2019 or 2020 return?
