Was the new roof included as an asset that was sold in August of 2023? Or was the new roof simply reported as an asset?
You would allocate the selling price over the two assets, the residential property and the roof. (We ignore the cost of land for purposes of this example.)
For instance, you purchased the property for $100,000, the new roof cost $10,000 and you sold the rental property for $220,000. Was the $220,000 selling price allocated over the two assets?
Basis Selling price
Rental property $100,000 $200,000
New roof $ 10,000 $ 20,000
$110,000 $220,000
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