Hi KarenL. I did have improvements made in the year my rental property was sold. When I go to mark my rental property asset as sold do I simply add the cost of the improvements to the original cost basis? Will that raise any red flags?
Also, it seems that Turbo Tax isn't including my previous improvements from my assets list. Turbo Tax is calculating a much higher gain than I expected. Is there some action I need to take to force Turbo Tax to account for my previous capital improvements?
For example I purchased the property in 2006 for $62,402.00. I sold the property in 2018 for $56,200 and had selling costs of $6,965.00 Depreciation taken on the rental property was approx $27,390. Total capital improvements was $7,871.
Adjust cost basis: 62,402 + 7,871 - 27,390 = 42,883
Sales price: 56,200
Sales expenses: 6,965
Gain: 56,200 - 6,965 - 42,883 = 6,352
When I go through the screens to sell the property Turbo Tax is stating my gain is $14,251. What am I missing? Is there some other part of the calculation that Turbo Tax is doing but it just doesn't show the details? Even when I add in the 25% depreciation recapture I still end up short of their total.
Sorry for the long post. Do you have any thoughts on what I might be doing wrong? My math on paper seems correct so maybe I'm doing something wrong in the application.
Edit: I went through and added my improvements to the original cost basis after which I was closer to the gain I was expecting. However it affected my depreciation for 2018 so that feels like the wrong thing to do. I'm kinda stuck right now :(
