In years past I am normally lower side of the middle. This year I am what looks like 85-90%. We sold Two rental properties, sold our primary, and moved into our last rental. We did a lot of costly remodeling to the rentals before selling. I put the repairs and supplies on the schedule E for that particular house. Should I just add all remodeling/rehabitating cost and enter it as "other" and descripe as remodeling for sale of property. It doesn't change the taxes I owe but would it bring down my Audit Risk? What else can I do to bring down my Audit Risk?
We did a lot of costly remodeling to the rentals before selling. I put the repairs and supplies on the schedule E for that particular house.
What particular house? The rental you sold I assume. I'll go with that assumption.
Any expenses incurred on the property after the last renter moved out are *not* deductible on SCH E a a rental expense. At best, some of those expenses "might" be sales expenses or cost incurred preparing the property sale.
Any property improvements, (which have nothing to do with repair/maintenance expenses), are added to the cost basis. However, since those property improvements were done between the time the last renter moved out and the closing date of the sale, they were never placed "in service" as a rental asset. If you enter those improvements in the assets/depreciation section then you enter an "in service" date of the closing date of the sale (because the program demands such a date) and a business use percentage of .01% (because the program will not accept 0% business use on an asset). That way, no depreciation will be taken, or if any is taken it will be so minuscule that it won't matter. Then you can report the sale in the SCH E section of the program.
Should I just add all remodeling/rehabitating cost and enter it as "other" and descripe as remodeling for sale of property.
Absolutely not, as that "will" have a high probability of raising flags.