I added a new roof and laminate flooring to a rental in 2021. I depreciated those in 2021 as well. I sold the rental in 2022. Can I add those to my cost basis? Where?

[PatriciaV]

Yes, your remaining basis in those assets will be included in your sale calculations but not as part of the basis of the residence. Instead, allocate a portion of the sales proceeds to the roof and flooring first, then apply the remainder to the residence.

Critter-3 has posted an excellent example of How to Allocate Gains to Various Assets. 

[pwlepp-gmail-com]

That's great.  Thanks for the help.  One further question.  How/where do I enter this is turbo tax?  Under Rental Property>Sold rental property>add asset?

Thanks again,

Paul

[pwlepp-gmail-com]

Yet another question:  I converted my home (purchased in 2004) to a rental in 2014 and sold in 2022.  I understand I assign my cost basis as the fair market value at the time of conversion. But working through the rental sales prompts turbotax asks for the date the property was purchased or acquired.  I would put 2014 here, correct?

Thanks as always,

Paul

[MarilynG1]

In the Rental section, in the Property Profile section, you can indicate that the house was sold. Continue, and say it was 'rented all year' (up to the sale) and 'at a fair price'.  Enter any Rental Income/Expenses you had in 2022.

In the Assets section, Edit the house.  You will get a screen with the amount of Prior Depreciation Taken, and on the next screen, the amount of 2022 depreciation.  Add those amounts together and note that amount. 

For other assets, Edit each one and indicate item 'was sold, retired...' and the sale date.  Use Form 4562 to see your original Cost Basis, and amount of Depreciation Taken.  Use this to calculate Remaining Basis for each asset and note that amount.  Then you're done with Schedule E. 

You can 'sell' the Asset for it's remaining basis (less depreciation) to net $0 on their sale, or you can 'sell' the asset for more or less than that amount.  Remember that you need to allocate a portion of the total Sales Price to complete the sale of asset either way.  

Then report the sales under 'Sale of Business Property'.  Type that phrase in the Search to get to that section. Check the first box and continue.  You will enter either the house or an asset for description. The Cost of the property is the Remaining Basis, and enter the Depreciation Taken.  

The Sale Price will either be same as the Cost plus Depreciation (to net $0 on an asset) or another amount, if you want a gain/loss.  For the house itself, the Sales Price adjusted for what is needed to apply to the other asset sales.  You can add Sales Expenses to the Cost here, or allocate a % to the house and each asset to see what result is best for you.  TurboTax will tell you that you don't need to report sales that net $0. 

You can view the sale data on Form 4797, Line 24.  

Since you already set up your rental house as an Asset, TurboTax has been using the amount you originally entered to calculate depreciation.  You can enter your original purchase date, since calculations only began on the date you indicated you first started renting. 

@pwlepp-gmail-com