Expenses preparing rental property for sale

I’m using TurboTax 2019 to estimate my taxes for 2020. My tenant moved out 6/30/20. Since then I am getting the rental ready to sell - paint, carpet, appliances, travel to the rental, etc. I assume entering these expenses will reduce my taxes. I believe I enter an asset, like carpet, under Assets. So I should select “I purchased this asset new”, correct? Then how do I answer “Have you used this item 100% for business since you acquired it?”

Does painting go under Repair Expenses?

I put mileage under Vehicle Expenses?

I understand this would all go in the spots I’m specifying when I was renting, but don’t know now that I am selling.

Investors & landlords

STOP ... all of those will be listed as REPAIRS on the Sch E  IF  you paid for them & sold the property in the same tax year. 

 

Mileage goes under vehicle expenses like normal. 

Investors & landlords

Thank you.  Can you tell me when I will need to pay the capital gains tax assuming I go to settlement by the end of the year? Would I just make a payment via estimated tax?

Carl
Level 15

Investors & landlords

If necessary, you can make an estimated tax payment at www.irs.gov/payments at any time you like. Just remember to print your receipt and store it with your 2020 tax information.

Understand that if you sell the rental property in the same tax year that the last renter moved out, then it makes no sense to convert the property to personal use. Leave it classified as a rental. All repair costs are deductible as a rental expense on the SCH E. Maintenence costs, depending on what they are would be claimed on SCH E as a maintenance cost, or reported as "carrying cost" if the cost was incurred for the sole purpose of maintaining it's sale value. But from what I've seen and experienced in the past, if you manage to sell the property within 4-6 months after the last renter moved out, practically all expenses incurred will be rental expenses claimed on SCH E, with a slim possibility of a few carrying costs which basically add to your cost basis.

One decent example of carrying costs would be property taxes paid at the closing (and not before) to cover the number of days you owned the property during the year, from the day after the last taxing period ended, up to the day of the sale closing.