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How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?
How to calculate & report in Turbotax the sale of assets that belong to the sold rental property? By assets I mean assets like appliances, improvements, etc inside of the sold rental property, that were depreciating and not expensed? Do I need to allocate the sale price between the house and all the other assets? Is there any instructions on how do it and how to do it in Turbo tax?
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June 3, 2019
1:39 PM
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Investors & landlords
In a perfect and purist world, you should be allocating the sales price between each of those assets -especially if you depreciated per asset. But most people, do whole property depreciation ( because buy with those appliances in place and sell in the same manner) and therefore do not go through the pain of allocation.
June 3, 2019
1:40 PM
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PK, thank you for your response. I purchased some appliances, assets and did some improvements long after I purchased the property. So how exactly should I allocate the sale price of the house between the building and those assets and improvements? Is there any recommended way to do it, any proportions? And how do I show this allocation & sale of those assets on Turbotax?
June 3, 2019
1:40 PM
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@larisa322 , say when you bought the property for $100,000 the appliances were old. Then the following changes/ improvements took place: 4th year you replaced the stove for $800, 6th year you replaced the furnace for $2400 and then just before sale of the property you replaced the carpets with hardwood flooring for $12000.. Under ordinary circumstances all of these would be considered improvements but I would suspect that most people would claim the stove replacement as a repair ( because it probably did not change the value of the property.). Suppose further that you followed this ( non-puristic) path and claimed the stove as an expense but did remember to claim $2000 ( of the $2400) of the furnace as an improvement. Therefore you would have had an additional depreciation for the $2000 improvement. Now when you sell the property you include the floor replacement of $12,000 as part of the sales prep expenses, the depreciated $2000 for the furnace as the basis of the furnace and probably allocate the same amount as its contribution to sales price. Generally what you are trying to do is to the extent feasible allocate the sales price to the different components that you had depreciated ( i.e. recognized as individual assets) and allocate the land and the house as the bulk of the price -- which is generally true. IRS really does not care how it has been allocated as long as the total price has been accounted for. Your gain is on the total unless of course you sold the house+land and then sold the other assets ( say the stove ) separately--- in this case, yes you have to allocate its contribution and profit/loss line item by line item.
Are there any guidelines to follow ? I do not believe that you would find one , in the personal income area -- an entity selling its business assets definitely would have this asset by asset situation and its books would keep track of individual depreciation.
Just do the best you can , keep records of how you arrived at your figures. Good Luck
Are there any guidelines to follow ? I do not believe that you would find one , in the personal income area -- an entity selling its business assets definitely would have this asset by asset situation and its books would keep track of individual depreciation.
Just do the best you can , keep records of how you arrived at your figures. Good Luck
June 3, 2019
1:40 PM
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pk, Could you please advise on how dshould I show this allocation & sale of those assets on Turbotax? I need to get rid of all the depreciable assets together with the sale of the house
June 3, 2019
1:40 PM