Cost box in the Residential rental real estate, Review Information screen on TT 2024

[VQuest]

What does Turbotax expect to be the value in the "Cost" box in the Residential rental real estate, Review Information screen on TT 2024?  It is directly above the "Land" box.  It is in the Review Information screen, as it pulls from the prior year's return. 

Does it want the TOTAL cost (including Land value and Building cost, etc)?  or does it want just the NET cost (after subtracting out the Land cost)?  

With a $40K land value,, for example, upon the sale of the rental house, the tax affect is like $10K.

I am surprised that TT doesn't have more guidance on that page.

Subsequent pages regarding the Sales price, there is a drop down description:  "For a sale involving land, the sales price and expenses must be divided, or allocated, between the amount received and paid for the land and the amount received and paid for the improvement portion of the property." 

For the Cost, will the TT program do the subtraction ? (I don't want it to subtract the Land cost twice and cause higher taxes.

If anyone can assist, please help.

[DianeW777]

Yes, you put the full amount in the cost box and then the cost of the land only in the land box. TurboTax will take the difference as your depreciable basis for your rental property.

• Example: $50,000 total cost, $10,000 land cost = $40,000 depreciable basis used for depreciation.

Yes, there is a separate sales price for each asset in the rental activity when the property is sold. See the example below to determine the selling price and sales expenses for each asset involved in the sale. Make all of your entries in the rental property and TurboTax will carry the results where they need to go.  Land is an 'appreciable' asset which is why it is listed separately. There will be no depreciation recapture on land.

Example:  Original Cost (of each asset on your depreciation schedule including appliances, etc) 

$10,000 Land                = 13.33% 

$50,000 House              = 66.67%

$15,000 Improvements  = 20%

$75,000 Total                 = 100%

Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.