Thanks! I assume you mean that my starting basis is 406,000 (total cost when purchased 464,000 - 58,000 land), correct? And, add to the 406,000 any home improvements like the new water heater? I already included the new water heater around 3 yrs ago in my taxes as rental property expenses so does turbotax automatically add it to the cost basis and I just don't see it or do I still need to add it to the cost basis now that I sold it? I just want to make sure I am not including it twice on the final cost basis. If I need to add it, I don't see the screen you included in your response in the ones I have to complete in turbotax. The closest one is this one is this one - so would I change the 464K on the cost line (turbotax definition is the amount you paid for it, plus freight, installation, sales tax, legal fees AND further explanation from turbotax - The cost (basis) of an asset is the amount you paid for it plus what you spent to acquire the item, such as freight, installation, sales tax, and legal fees) I guess it confuses me because the definition doesn't state to add any improvements made to the rental and that is why I decided to ask - Thanks!:
| Cost: |
| The amount you paid for it, plus freight, installation, sales tax, legal fees. Learn More |
| | 464,000 |
| Cost of Land: | |
| If the cost of this property includes the land value, enter the land value here Learn More | 58000 |
| | |
| Date purchased or acquired: (mm/dd/yyyy) | 5/10/2010 |
OR
Would the improvements be included here under the sale expenses?
Sales Information
| Enter the following information about the sale of this asset. You must divide, or allocate (see below for definition of allocate from turbotax) the sales priceand expenses between the land and the asset (improvement) based on their fair market values. |
| |
| Asset Sales Price (Business Portion Only) $506,025. | |
| Asset Sales Expenses (Business Portion) Only $25,301. | |
| Land Sales Price (Business Portion Only) $78,975. | |
| Land Sales Expenses (Business Portion Only) $3,948. | |
Allocate - turbotax's definition:
For a sale involving land, the sales price and expenses must be divided, or allocated, between the amount received and paid for the land and the amount received and paid for the improvement portion of the property.
Example:
You sold a property for $200,000 and had sales expenses of $20,000. If 25% of the value was in the land and 75% was in the improvements, you should allocate these amounts as follows:
Land Sales Price: $200,000 X 25% = $50,000
Improvement Sales Price: $200,000 X 75% = $150,000
Land Sales Expenses: $20,000 X 25% = $5,000
Improvement Sales Expenses: $20,000 X 75% = $15,000
Again, original total cost to buy it was 464K. Sold it last yr for 585K and total depreciation is 157K.
Thank you again!
