Hi,
I purchased a rental property for 450,000 back in 2020. Its been used 100% for rental. Land value is around 101k based on property tax bill. I made 45k in improvements before selling it for 500,000 in 2022.
Based on what I understand , the capital gains should be 500k - (450k + 45k ) = 5k.
I start by entering the info in "Rental Properties and Royalties (Sch E)"
Non at Real Estate Professional-> Add a Rental or Royalty
->Rental Property , Checked "Sold or disposed in 2022"
Start "Sale of Property/Depreciation"
-Yes for assets that can be depreciated
-Yes for improvements in 2022
-No for annual election. Is this right to get my improvements into my purchase price?
Adding asset for improvement
-Add Asset -> Rental Real Estate Property -> Appliances, carpet, furniture -> Appliance Replacement, 45000, date purchsed in 2022 -> Checked I purchased this asset, checked "The Item was sold...", YES 100% of time for business. -> take full deduction this year.
Adding Asset for rental property itself.
-Add Asset->Rental Real Estate Property -> Residential Rental Real Estate -> Cost 450k, Land 101k, purchased in 2020- > Check "I purchased this asset", Checked "The Item was sold..", Entered Date sold in 2022, YES 100% , Entered date in 2020 for starting use. -> 19k in depreciation -> No Special handling -> No for main home -> Asset Sales Price 500k (based on 1099-S), Land Sales Price 101k? , Lane Sales Expense 1049 (20%), Asset Sales Expense: 4196 (80%)
After all is entered, it calculates a gain of 166k. It seems like the Land Value is taken out of the purchase price and the improvement wasnt considered. Of all the videos ive seen on how to calculate gain for rental property sold, it was not done this way. Am I entering all this incorrectly?
Thanks
