Capital improvements on Rental property - Do I add to basis?

[PoconoRick]

I bought an RV park for $250k in 2020 , put in $150k improvements and sold is just over 1 year later for $425k.

Of the $150k I spend roughly $100k was capital improvements (New electrical system/ plumbing/ major renovations) and $50k was regular expenses.

(I'm using TT business for filing a 1065 for my partnership LLC) 

I have entered the building portion of the purchase price $150k (Purchase price - land value) as a depreciable rental real estate asset. 

My question is do I enter each of these  capital expenses as depreciable assets in TT business? or just add them to my basis for the sale? I thought I was supposed to enter them each as an asset but then when I entered the sale of the property in TT it only asked me what I paid for the property and what I sold it for.. It didn't take the $100k of capital improvements that I had entered as a "Rental real estate asset" and was depreciating and add them to the basis of the sale.

Or do I just add the $100k of capital improvements to the what I bought it for question and enter $350k? and not list the capital improvements as a rental property asset?

[JamesG1]

In TurboTax Business, I would report the RV park purchase of $250,000 as one asset under Federal Taxes / Deductions / Your Deductions / Depreciation of Assets / Assets.

I would report the $100,000 of capital improvements as a second asset under Federal Taxes / Deductions / Your Deductions / Depreciation of Assets / Assets.

Then I would report the sale of the assets under Federal Taxes / QuickBooks / Your Income / Dispose of Business Property / Business property assets.

Click Edit to the right of the two assets.  Report date of sale and selling price, selling expenses, etc.

The sale should be reported on IRS Form 4797.  Sale of land may be reflected on page one.  Sale of the building and improvements are reflected on page two.

[PoconoRick]

James- Thanks for the reply.

My confusion is still that TT doesn't take the capital improvements spend off the selling price of the property.. nor does it add it to the basis .

I see that I can enter that I sold the "Capital Improvement" asset but do I say that I sold it for "Zero" ? 

Basically I'm trying to figure out how I get to deduct the $100k in capital improvements from the Capital Gains on the sale of the property in Turbo Tax.

Also, since I'm doing the capital improvement in the same year I'm selling the property does that mean I should not enter it into as a depreciable asset since I read somewhere that you are not supposed to depreciate improvements in the same year that you are selling the property.

UGH..

Thanks for any input

[DaveF1006]

Yes, I would report the improvement in the asset depreciation section in your rental property section and then report that you sold it for zero. Please read this Turbo Tax post for further information.

Rental property capital improvements in same year as sale

There is no restriction for placing capital improvements in existing rental property and then disposing of them in the same year. What will happen is that you will claim the first year's depreciation amount as an expense but will then this same depreciation amount will be reflected in the ordinary loss amount for the improvement. The expense and recapture essentially offset each other.

@PoconoRick