Solved: How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?
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larisa322
New Member

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property? By assets I mean assets like appliances, improvements, etc inside of the sold rental property, that were depreciating and not expensed? Do I need to allocate the sale price between the house and all the other assets? Is there any instructions on how do it and how to do it in Turbo tax?


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pk
Level 12
Level 12

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

In a perfect and purist world, you should be allocating the sales  price between each of those assets -especially if you depreciated  per asset.  But most people, do whole property depreciation ( because buy with those appliances in place  and sell in the same manner) and therefore do not go through the pain of allocation.

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5 Replies
pk
Level 12
Level 12

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

In a perfect and purist world, you should be allocating the sales  price between each of those assets -especially if you depreciated  per asset.  But most people, do whole property depreciation ( because buy with those appliances in place  and sell in the same manner) and therefore do not go through the pain of allocation.

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larisa322
New Member

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

PK, thank you for your response. I purchased some appliances, assets and did some improvements long after I purchased the property. So how exactly should I allocate the sale price of the house between the building and those assets and improvements? Is there any recommended way to do it, any proportions? And how do I show this allocation & sale of those assets on Turbotax?
pk
Level 12
Level 12

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

@larisa322 ,  say when you bought the property for $100,000 the appliances were old. Then the following  changes/ improvements  took place: 4th year you replaced the stove for $800,  6th year you replaced the  furnace for $2400 and then just before sale of the property you replaced the carpets with hardwood flooring for $12000..  Under ordinary circumstances all of these would be considered improvements but I would suspect that most people would claim  the  stove replacement as a repair ( because it probably did not change the value of the  property.).   Suppose further  that you followed this ( non-puristic) path  and claimed the  stove as an expense but did remember to claim $2000  ( of the $2400)  of the furnace  as an improvement. Therefore  you would have had an additional depreciation for the $2000 improvement.  Now when you sell the property you include the  floor replacement of $12,000 as part of the sales prep expenses, the depreciated  $2000 for the furnace as the basis of the furnace  and probably allocate  the same amount as its contribution to sales price.  Generally what you are trying to do is to the extent feasible allocate  the  sales price to the different components that you had depreciated ( i.e. recognized as individual assets) and  allocate the  land and the house as the bulk of the  price -- which is generally true.   IRS  really does not care  how it has been allocated as long as the total price has been accounted for.  Your gain is on the total unless of course you sold the house+land  and then sold the other assets ( say the stove ) separately--- in this case, yes you have to allocate its contribution and profit/loss line item by line item.
Are there any guidelines to follow ?  I do not believe that you would find one , in the personal income area -- an entity selling its business assets  definitely would have this asset by asset situation  and its books would keep track of individual depreciation.
Just do the best you can , keep records  of how you arrived at your  figures. Good Luck
larisa322
New Member

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

Thank you very much, pk!
larisa322
New Member

How to calculate & report in Turbotax the sale of assets that belong to the sold rental property?

pk, Could you please advise on how dshould I show this allocation & sale of those assets on Turbotax? I need to get rid of all the depreciable assets together with the sale of the house
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