How to adjust cost basis of a rental property when selling it under 'Sale of Property/Depreciation' section?

[manbeing]

I installed a roof-$4k when I bought the rental property a few years ago, and this roof has been a depreciated asset over the years. I sold this rental in 2018 and now I want to add the original price, $4k back to the cost of rental property to reduce the capital gain, of course, the past depreciations will be recaptured.

But I don't know two things:

1. where can I adjust cost basis in 'Sale of Property/Depreciation' section of this rental property?

2. How much sales proceeds should I allocate to this depreciated roof asset? I must enter some value there, otherwise turbo tax will not do the depreciation capture for this roof asset on Form 4797.

I understand I can do cost basis in the 'Sale of Business Property' section, but if so, I cannot allocate the sales proceeds to other depreciated assets in the rental.

Please help!

[Anita01 · Accepted solution]

If you are selling a rental property,you sue the rental interview to enter all the sale information.  As you go through the rental interview, you say you sold the property.  When you come to the asset summary, you edit each asset to enter the allocation of the sale price and selling cots to each asset.  You leave the roof at the depreciated value.  You already entered the cost of it when you purchased and added it to assets.  You can't change the original cost you ave been using for depreciation.

You can take the original roof cost as a percentage of the entire property original cost to get an allocation of sale information for the roof.

[Anita01]

Why did you find this answer not helpful?

[manbeing]

Thank you for reply. I read your above answer three times and honestly, I still don't get it. I guess I may not express my original question clearly.  Let me rephrase my question. If you could kindly answer it, I will definitely recommend it.  I bought a rental home 5 years , installed a roof ($4,000 improvement) 3 years and sold this rental home last year,2018.  The roof has been depreciated on tax returns over the years. For 2018 tax return, I add the original cost of roof back to the cost basis of rental home to reduce capital gain. My question is if I am doing so, how much sales price should I allocate to this depreciated roof?  Should I give $0 sales price since I have added original cost of roof to cost basis of rental home? Thank you!

[Anita01]

The problem lies in your saying you add the cost of the roof back to the basis.  If you entered the roof as a depreciable asset when you put it on, as apparently you did, there is no reason to add it back at full cost as part of basis.  The program adds up all the original costs of all your assets to determine the original cost of the entire property.  If you add it in again, you're double counting.  You could have 20 assets and the program would add the cost of all of them to determine the cost basis before adjusting for depreciation.

[AHylton]

Hi TurboTaxAnita. Where does TT show the calculation of all the assets? When you edit the "rental property" asset to mark it sold how would the program know to add up the other assets? The basis is only on each individual asset correct?

How do you report an improvement that was placed "in service" in the same year the property was sold? For example: I replace carpet in May 2018 ($2,000) and then sell the rental property in October of 2018.

[nicdagg]

I am having the same issue.  I added a new kitchen and floors to my rental property in Jan 2018.  +$20k. I sold later in the year in Oct 2018.  I added the improvement under the property...so now I have the original purchase cost basis as one line, and the improvements as the second line.  When I edit the property to include the sale information, it is not including the +$20k in the adjusted basis.  

[AHylton]

@nicdagg Were you able to get this to work in TT? If so, can you describe the steps you took?

[nicdagg]

No luck here!  Please help if anyone has any advice

[stevekayak]

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/sale-of-rental-proper...

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/sale-of-rental-home-h...

That might help.