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giftgaffer
New Member

How do I know if Turbotax depreciated my rental property in previous years? How do i account for renovation costs before sales within the year of the sale?

 
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HelenaC
New Member

How do I know if Turbotax depreciated my rental property in previous years? How do i account for renovation costs before sales within the year of the sale?

When you started you rental you should have set up the property as an asset to be depreciated in TurboTax. Each year, the current year depreciation amount is on Schedule E, Line 18 Depreciation Expense. 

TurboTax also generates inception to date depreciation on Form 4562 Depreciation and Amortization Report and Form 4562 Alternative Minimum Tax Depreciation Report.

See the screenshots below.

The renovation costs would be entered as an asset even if it was within the year of sale and added to the basis of your property. 

Per Per IRS Publication 527, Chapter 2, Page 8: Additions or improvements.

Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. This includes all direct costs, such as material and labor, but doesn’t include your own labor. It also includes all expenses related to the addition or improvement. 

  • For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. 
  • Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. 

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1 Reply
HelenaC
New Member

How do I know if Turbotax depreciated my rental property in previous years? How do i account for renovation costs before sales within the year of the sale?

When you started you rental you should have set up the property as an asset to be depreciated in TurboTax. Each year, the current year depreciation amount is on Schedule E, Line 18 Depreciation Expense. 

TurboTax also generates inception to date depreciation on Form 4562 Depreciation and Amortization Report and Form 4562 Alternative Minimum Tax Depreciation Report.

See the screenshots below.

The renovation costs would be entered as an asset even if it was within the year of sale and added to the basis of your property. 

Per Per IRS Publication 527, Chapter 2, Page 8: Additions or improvements.

Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. This includes all direct costs, such as material and labor, but doesn’t include your own labor. It also includes all expenses related to the addition or improvement. 

  • For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. 
  • Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. 
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