Hi,
I have been following this thread as I am in a similar situation. I sold a rental property in 2022 that I had been renting out since 1996. In 2022 I spent about $40,000 in renovations to the home (floors, repairs, appliances, etc.) and not the property just prior to listing it.
I can figure out how to allocate the net sales price between Asset and Land. I just want to make sure I understand how and where to assign the $40,000 in renovations. If I understand correctly, I do not add the improvements a "Property Asset" placed in service in 2022. Rather, I consider it a selling expense (similar to a RE agent fee, closing fee, county tax, required pest inspection cost, etc.) thereby increasing my sales expenses and reducing my gain.
Is this correct. Thanks.
