@DianeW777 -
Your explanations are remarkable and very thorough. It's just me that's a little slow in understanding. I'm going to try to re-state what you said using different words to make sure I'm following correctly. I'm good with following your steps for going through Turbotax for the disposition. but the sales price aspect still feels complicated to me.
- When House A was exchanged for House B, Turbotax calculated the basis for House B based on the cost basis of House A. That's now what TT uses to calculate the depreciation of House B. Right?
- Each capital improvement on House A (and the land) stayed on Form 4562 with the same Cost as the original expense at the time it was added and each has continued to depreciate over the years (except the land, of course). Some are fully depreciated. Is their selling price now $0?
- As I'm following through the steps of the sale process in TT, it gets to the page asking for the Sales Price and I'm not understanding #1 or 2 of your answer about the selling price for assets. If I added a capital improvement 10 years ago and it was set to depreciate over 27.5 years, how do I determine either the current basis or the fair market value to come up with the Sales Price of that asset? Is the current basis the original cost minus depreciation? Otherwise, what's a concrete driveway that cost $4000 to install in 2010 worth in 2020? I have no idea.
- How can I determine the separate sale expenses for individual capital improvements? All I know are the sales expenses for the entire real estate sales transaction which includes all assets?
- If I take Sales Price of all the capital improvement assets and add them up, do I subtract that from the gross sales price of the rental house to get the sales price of the house alone to put in TT? For example, if the closing price of the rental was $150,000 and I've determined that the sales prices of all the assets added up to $15,000, does that make the sales price of the rental house #135,000?
I know there's at least one key part of this that I'm not yet comprehending, but it will all make sense once we can figure out what that is. Thanks for your patience in explaining everything.
