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Level 2
posted Mar 14, 2025 9:24:40 AM

How do I report improvements on the sale of a rental property?

I sold a rental property this year. Not sure how Turbo Tax adjusts the cost basis... Where do I report the improvements?

0 3 1599
3 Replies
Expert Alumni
Mar 14, 2025 9:37:12 AM

If they were expenses, such as painting, you would report those expenses before reporting the sale. 

Always report the income and expenses first, since depreciation will be calculated for the months before the sale. 

 

If they were improvements, such as a new roof, enter that as a new (separate) asset and allocate part of the sale proceeds to that asset. 

Let's say  if the building cost 100,000, land 5,000, and the roof was 10,000 and you sold for 300,000 you would allocate part of the sales proceeds to the roof, lets say 10,000 (or whatever the remaining basis is if it had been depreciated) to get it off the books and the remaining 290,000 between the land and building.  

Level 15
Mar 14, 2025 9:42:08 AM

to add to @KrisD15 response if the improvements were made in a year before the sale you should have included them in the reporting and taken depreciation each year. if you didn't, see a tax pro because you are responsible for recapturing depreciation you never took. 

Level 2
Mar 14, 2025 10:01:06 AM

Yes, I have reported my improvements in the years prior.  I did take depreciation for those items.  It sounds like if I've already reported the improvements in prior years, then I do not need to report them at the sale.  What about those depreciations that were reported prior but are depreciated over a period of years.  Does TurboTax resolve the difference of years that have not been able to depreciate?  Thanks