Adding First Rental Property Cost Basis Entry

[dwheat17]

Hello, 

I have a rental property that I purchased this year.  I setup the profile, but I was not asked to enter the value of the house or land.  I also was not asked to input the various escrow costs that would be part of my cost basis.  When setting up the profile I selected "New - 2022 was the first year I rented this property." 

Where in the program is the cost basis for the property and for depreciation of the house set up?  

[Anonymous_ · Accepted solution]

The Assets/Depreciation section.

[MarilynG1]

Enter your Rental Property in the Assets section, after completing the Property Profile.

Indicate 'Real Estate' and you will be asked for Cost Basis of both improvements and land.  You can use a Property Tax Bill to determine % to allocate to each.

Add the purchase costs and value of any improvements to your Cost Basis.  Your cost basis in the property is generally the amount that you paid for the property (your acquisition cost plus any expenses), including any money you borrowed to buy the place.

Here's detailed info on Rental Property. 

@dwheat17

[dwheat17]

Thank you.  I'm a little confused.  Off the bat I am asked if I bought any items for any business, rental property and/or farm that cost $2.500 or less in 2022.  Of course I did as I am self-employed for my income.  When I answer yes it asks on the next page if I want to deduct these items as an expense. 

Is it referring to all the other items I entered or just this one, which will be the house, which of course I cannot expense.  It then asks me if I want to make this annual election.  Once again I'm not sure what it is referring to all the expense or the one I am about to enter..

Any help would be appreciated.

[GeorgeM777]

No, it's referring to only those items you purchased for $2,500 or less.   Select Yes, if you want to deduct any item that costs $2,500 or less.  Eventually, you should see the screen, Now, let's review each item you bought.  Select the option that applies to you.  On the screen Your Property Assets, you will probably see your rental property, and it is here that you will enter your other assets, i.e., the ones that cost $2,500 or less.  Enter your information and at the screen, How Do You Want to Deduct this Item? you will see the various options available.  Select one and eventually you will get back to the Your Property Asset screen.  Here you can add additional assets.  Repeat the same process for all of the items you purchased.  

The election to deduct items that cost $2,500 can be done each year, hence the name annual election.  However, once an item that costs $2,500 or less has been deducted, then that item can no longer be deducted.  The annual election relates to items you think you may purchase in the future.  If you select "yes" to the annual election question, you still retain the option not to use it in future years.

@dwheat17 

[knightrojan]

There is no option to add this in Turbotax Online.

[AnnetteB6]

Please clarify what you are trying to add to your return.  Are you working on rental income and expenses or self-employed business income and expenses?

@knightrojan 

[dwheat17]

Rental Income.  I think I have it figured out.  When you setup a rental property you are not asked about the cost-basis.  That only occurs when you set it up as an Asset under Assets and Depreciation.  Is that your understanding?

[TeresaM]

Yes, you will set up the rental property as an asset within the Schedule E for that particular property and begin depreciation in the first year. 
After that, if you add onto the building, or build a fence, or other assets, you will add those as additional assets and begin their depreciation. 

They will all transfer into your TurboTax for the next year and continue to be tracked. 
 

[deafmgecko]

Hello, I want to bring up on this post.  I'm struggling with my cost basis for my rental property which started last year.  After I put down some numbers for my rental property, it showed that there is over $100,000 on land for cost basis and there is $0 on building (my rental property).  It makes no sense.  It should be over $100,000 on building and $50,000 on land.  I tried to go back to see if I had made a mistake somewhere but I couldn't find it to correct.  Please let me know how can I fix.

Thanks!

[RobertB4444]

Go back to the property that you're talking about and go back through the steps to enter the value of the rental for depreciation.  

• Go to 'Assets/Depreciation' and click update
• Check 'No, I want to review my answers to my annual election questions'
• Click 'edit' next to the property and then click continue until you get to the screen that says 'Tell us about this rental asset'
• Under 'Cost' the first box needs to have the total cost that you paid for the property (in your example that would be $150,000)
• Then the second box should have the land value that is included in the amount in the first box (in your example that is $50,000)
• Click through.  That should fix the problem.

@deafmgecko 

[deafmgecko]

I'm sorry, RobertB4444.  I couldn't find it.  I don't see any Click update to Check, "No, I want to review my answers to my annual election questions."  I tried to look for Assets/Depreciation like you said but I see is list of rental expenses.  

[KrisD15]

Please return to Rental Properties and Royalties

SELECT UPDATE 

"Income from rentals or Royalty Property You Own"

"Do you want to review your rental and royalty information?"

SELECT YES 

You may need to SELECT EDIT on the next screen showing the list of "Location of Property"

SELECT UPDATE for the TOP SECTION "Property Profile"

Continue through the screens where the PURCHASE PRICE is entered

Continue through to the screen that asks for Land Value AND Improvement Value (the building)

@deafmgecko 

[Anonymous_]

@deafmgecko Are you using an online or desktop version of TurboTax?

[deafmgecko]

I found a problem, I didn't put any improvement value.  That's why it wasn't showing any cost basis on building.

Okay, I have property tax information for my rental property.  I'm not sure which is to put down for improvement value.

Buildings

Appraised (just)

Assessed (estimated)

Which one should I put down for improvement value?

Also, if it said $150,000 for value, do I subtract it from land value?  EX: $100,000 for improvement and $50,000 for land.

(I'm using online version and personal taxes.  The website for TurboTax looks very different from your screenshots.)

Thank you for your time!