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Cost basis for rental property being sold (Form 4797)

Turbotax (Premium) asked me for the original price paid (for what was my primary residence when I bought it in 1997). I started renting it out in 2018 and sold it in 2021.  Without any other data, I used 80%-20% for the home-land value. Turbotax used the 80% (purchase price) to derive 'cost or other basis' in line 21 of form 4797. (I'm not sure exactly how they calculated it; it's about 20% lower than the home purchase price.)

Unless I missed something, Turbotax never asked about costs of capital improvements (made between 1997 and 2018). Do just add my costs of capital improvements (new kitchen, roof, windows, siding...) to the number Turbotax put in line 21?

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4 Replies
ColeenD3
Expert Alumni

Cost basis for rental property being sold (Form 4797)

1) Your 80% of the cost, the building, is entered in PartIII Form 4797. The 20%, land, is entered in Part I.

 

2) Since you added assets while the property was a rental, you should have depreciated each one separately. You would include each asset as sold and apportion a bit of the sales price to each.

Cost basis for rental property being sold (Form 4797)

OK, I do have the house in Part III (80%) and the land in Part I (20%).  The improvements I made were actually before it was a rental property, made between 1987 and 2018. (I did make a few since 2018, and record those as rental expenses--repairs.) So in this case can I just adjust the cost basis?

Cost basis for rental property being sold (Form 4797)

I do not see a way to modify line 21. I can't change it in the forms view, and can't see where it is calculated from in the 'step-by-step' view. 

Cost basis for rental property being sold (Form 4797)


@DonP1960 wrote:

Turbotax never asked about costs of capital improvements (made between 1997 and 2018). D=

 

That should have been added to your original Basis for depreciation.  If you did not do that, there isn't much you can do now (besides amending the last 3 years to claim the proper amount of depreciation).  You must claim the proper depreciation that you SHOULD have claimed.

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