I am trying to determine how to COMPLETELY report a rental property Like Kind Exchange. A property is SOLD, the Exchange is done, the gain on the land and building are deferred but what about the remaing depreciable assets on the relinquished property? Are they reported somehow as being sold?
1. We sold our single family rental property this year using the "Like Kind Exchange" option to purchase another single family property that cost more. In the same year, we made renovations that we would like to deduct. Would these improvements such as new kitchen counters, appliances and flooring be listed as assets for depreciation or would some other method be used to report the deductions?
2. Form 8824 was completed for the Exchange. Next, how are the property assets handled? In TurboTax I listed the building asset as Exchanged so the gain would not be realized this year. There are other assets that have been depreciated such as carpet and a water heater. Are these assets reported as sold and allocated against the building sale portion to calculate any gain?
This is a follow up to the answer from Rick19744 . I'm putting it here because it not clear how else to respond to his answer.
Thank you for this information which you clearly explained un-like many others I read.
If you are still following, I would like to summarize and then ask something more.
Regarding the renovation items. My understanding is that they do not get applied to the property asset sheet but are only added to the property adjusted
basis.
As for original property assets in TurboTax at the:
Your Property Assets screen, I selected Land/Building property for Edit and 2 screens in "Did You Stop Using Asset in 2015" and selected Yes. I answered the
questions up to the Special Handling screen and answered Yes because on that same screen one of the line items says "This asset was used as a trade-in on a
new asset". Also the LEARN MORE help says
"If you trade in business property for similar property, it is considered a like-kind exchange. You report these exchanges under "Property Sales/Installment
Sales."
When you enter the exchange information, TurboTax will figure any gain on the exchange of properties that must be reported this year. We will also determine
the basis you must use for the asset received.To enter this exchange and figure the basis for the asset received, select Topic List in the toolbar at the top of the screen, scroll to the Income category,
Then choose the Other Income topic. When you are finished entering the exchange information, return to this section of the program to enter the asset received in the exchange"
I followed what TT says but it leads me to a business expense screen which did'nt seem correct in my case. Is this where I would enter data for Like Kind Exchange/8824?
Also very importantly do I repeat the process of indicating I traded each of the property assets?
Hopefully answers to these questions should allow me to reach the end this TurboTax maze.
