I have looked at the TT instructions and other answers regarding sale of rental property and am still not clear on the proper way to document depreciable improvements as part of the sale. I initially thought I could simply allot a percent of the sale price to land and then enter the balance as the sale price of the house, along with sale-related costs. Then, because the improvements were already included in the sale price, I would indicate $0 as their sale price. I assumed TT would then take care of recapture of depreciation for all items. but I came across an opinion that I was supposed to somehow assign a value to each improvement as part of the sale price - which seems unduly complicated, and I'm not sure how I would assign a value. I am valuing the land as a percentage of the full purchase price equal to the percent assigned when I purchased the property.
I have handled my own taxes for decades, including two rental properties for the past 7 years, and was team lead at a TT call center, but this one is making my head spin. Please make sure you are qualified to give an accurate answer. Thank you.
Addendum: I found a couple answers that somehow did not pop up before, which seem to indicate that TT will make an error if I assign a zero value to improvements when sold, so it appears I will indeed need to distribute the sale proceeds (minus land) across the improvements. But these instructions still leave me a bit confused When selling a rental property is allocating proceeds to land and improvements legal? (intuit.com) How do allocate rental property sales monies across different assets? (intuit.com)
